UBS has changed its view on the Swiss franc, changing the currency’s status from “least preferred” to “neutral”. This revaluation comes amid expectations that the US dollar will maintain its strength, with the potential for periodic appreciation.
However, UBS does not expect a sharp rally or significant dollar depreciation when the Federal Reserve begins its rate-cutting cycle, which is expected to begin in September.
The UBS forecast suggests that geopolitical uncertainty, particularly related to the Middle East, is likely to persist. The firm notes that unless there is a spike in oil prices due to genuine supply disruptions, these geopolitical factors should not lead to a significant increase in market risk aversion.
The firm continues to encourage cross-currency investments, which involve trading between two currencies other than the US dollar. UBS’s adjustment to the status of the Swiss franc indicates a change in the perceived risk and potential return of holding or trading the currency.
UBS’s revaluation of the Swiss franc reflects a broader analysis of the currency’s market performance. The new “neutral” rating on the Swiss franc, previously considered a less favorable option, suggests that the risks associated with short positions in the currency may have diminished.
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