Safe haven demand to underpin USD, JPY and CHF – Rabobank

Since the FOMC meeting in June, the safe-haven Japanese yen is the only G10 currency to have outperformed the US dollar. The Swiss franc is third in line. Economists at Rabobank expect the USD, JPY and CHF to remain well supported versus a broad basket of other G10 currencies.

Risk-off sentiment is clearly dominant

“Expectations regarding global growth are still far from clear of the risk of negative covid related surprises and this factor suggests safe haven currencies could remain in favour.”

“While the USD in recent years have been sensitive to global growth fears and to the broad performance of EM, the JPY often has a heightened sensitivity regarding regional geopolitical factors. This may test the current forecast that USD/JPY could push moderately higher on a 3 to 6 month view.”

“We have revised lower our EUR/CHF forecasts and see the 1.07/1,08 area been maintained on a 1 to 3 month view.”

“We retain our EUR/USD target of 1.16.”