Anna 
UBS has revised its outlook on the Swiss franc, upgrading the currency’s status from “least preferred” to “neutral.” This adjustment comes against the backdrop of expectations for sustained strength in the U.S. dollar, coupled with potential intermittent upticks in its value.
However, UBS does not foresee a sharp rally or significant depreciation of the dollar once the Federal Reserve initiates its anticipated rate-cutting cycle, slated to commence in September.
The firm’s forecast indicates that geopolitical uncertainties, particularly those centered around the Middle East, are poised to persist. UBS underscores that unless there is a tangible surge in oil prices triggered by actual disruptions in supply, these geopolitical elements are unlikely to spur a notable increase in market risk aversion.
Encouraging investment in currency crosses—entailing trading between two currencies excluding the U.S. dollar—remains a focus for UBS. The shift in the Swiss franc’s status signifies a reevaluation of the perceived risk and potential return associated with holding or trading the currency.
UBS’s reclassification of the Swiss franc reflects a comprehensive analysis of its positioning within the market. Once regarded as a less favorable option, the currency’s upgraded “neutral” rating suggests that the risks linked with short positions in the franc may have abated.
