EUR/CHF is gradually moving higher as easing geopolitical tensions trigger a partial unwind of the Swiss Franc’s (CHF) safe-haven premium, Société Générale's FX analysts Olivier Korber and Kit Juckes reports.

CHF weakens despite soft EUR/USD performance

"Safe-haven unwind and carry advantage. As geopolitical jitters ease, EUR/CHF has edged higher despite EUR/USD softness since the Christmas peak at 1.18, signaling a gradual unwind of CHF’s safe-haven bid. Pairing CHF shorts with NOK longs secures attractive carry, thanks to Norway’s elevated rates."

"Switzerland’s PMI miss confirms downside risks. Switzerland’s economy downside risks deepened with December’s manufacturing PMI plunging to 45.8 (largely below the most pessimistic forecast of 49). Coupled with 3Q GDP contraction, this reinforces economic fragility and undermines CHF’s defensive appeal."