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Low volatility boosts demand for Swiss franc funding, ING says

ING’s Chris Turner says investors are increasingly using franc funding to avoid the risk of sudden yen intervention, and that short CHF/JPY is becoming popular as a carry trade expression.

Reported · Written up by our desk · Major Pairs

FXStreet highlights ING analysis suggesting low volatility is weighing on two major funding currencies, the Swiss franc (CHF) and the Japanese yen (JPY), as investors look for cheaper and steadier ways to finance positions.

According to Chris Turner at ING, investors may shift toward CHF funding not only for lower borrowing costs, but also to reduce exposure to the possibility of sudden yen buying intervention from Tokyo and Washington.

ING also frames short CHF/JPY as a carry-positive way to express a yen view, noting that CHF and JPY have similar investment characteristics.

On EUR/CHF, ING says a move toward 0.95 would likely require higher oil prices and broadly higher rates, given the Swiss National Bank’s anchored zero-rate stance.

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