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Investing.com -- Foreign exchange (FX) quant signals are turning increasingly bullish on the Swiss franc, Bank of America strategists said, after the currency led gains across the G10 group last week alongside the surge in gold prices.
The bank pointed to strong demand from U.S. and Asia-based investors, adding that option flow data showed a 1.54% rise in one-month skew for the franc, the largest increase in the G10.
“Coinciding with gold price breaking out to a new all-time high, CHF saw the most gain across G10 FX over the past week,” BofA strategist Howard Du said in a Monday note.
Technical signals reinforced the move, with downtrend continuation flags for EUR/CHF and GBP/CHF, while USD/CHF also broke lower against a narrow 20-day Bollinger band.
Du believes September’s tendency to be bearish for risk assets could further support the franc.
“Any risk-off shock to come, in line with historical price actions, may support the low-beta currencies,” he wrote, adding that domestic political pressures in the U.S., Japan and euro area could amplify haven flows into the Swiss unit.
Du flagged GBP/CHF as the best way to play remaining weakness in sterling, noting it was the bank’s FX Signal of the Week at 1.0752. The pair has stayed below the mid-1.08 handle, keeping the downtrend intact, with indicators favoring fresh 2025 lows.
However, he warned that a broad relief rally in the pound could reverse that trend.
The bank’s models also showed bearish signals for the dollar against some emerging-market currencies, including the yuan and rand, while CHF remained one of the strongest G10 picks on quant grounds.