- Euro Swiss Franc Exchange Rate Well Below 1.07 – Pair remains below week’s opening levels
- Euro Demand Weakened by Eurozone Political Concerns – As well as dovish ECB
- EUR Forecast: German Trade Disappoints –But Euro holds ground
- Forecast: Eurozone Growth Results next Week – And Swiss CPI figures
Euro Swiss Franc Exchange Rate Recovers Thursday
The Euro Swiss Franc exchange rate looked to regain around half of its weekly losses on Thursday, largely due to a disappointing Switzerland unemployment rate of 3.7%. The pair looked to gain over 0.2% throughout the day.
Demand for the Euro was generally weak throughout the day due to a disappointing German trade surplus update from December. The balance was predicted to slip just slightly but instead fell from €22.7b to €18.7b.
However, as Germany ultimately printed a record high trade surplus for 2016, the Franc performed worse than the Euro on Thursday and EUR CHF recovered.
[Previously updated 12:43 GMT 09/02/2017]
Demand for the Swiss Franc plunged on Thursday, allowing the Euro Swiss Franc exchange rate to make a solid recovery from the lows seen on Wednesday.
Concerns about the future of the Eurozone due to political concerns and resurgent Grexit worries have made the Swiss Franc relatively unappealing as a ‘safe haven’ currency, causing investors to flock into alternatives like the US Dollar (USD) and gold.
Switzerland’s January unemployment rate results also disappointed investors. The key rate was predicted to worsen slightly from 3.5% to 3.6%, but instead came in at 3.7%.
As a result, the Euro became more appealing than the Franc on Thursday even amid Grexit fears and Eurozone political concerns.
[Previously updated 16:23 GMT 08/02/2017]
Euro Swiss Franc Exchange Rate Hits One-Year-Low on Wednesday
The Euro Swiss Franc exchange rate moved at a modest pace of -0.2% during Wednesday’s European session and ended up at its worst value since July 2015.
Demand for the Euro improved slightly later in the day due to weakness in the US Dollar, but as the weak US Dollar also benefitted the Franc, EUR CHF was unable to recover.
On Thursday, the Euro Swiss Franc exchange rate could recover slightly if Germany’s December trade balance results impress investors. However, if they come in much worse than expected, EUR CHF may remain near its lowest levels.
[Previously updated 12:48 GMT 08/02/2017]
The Euro Swiss Franc exchange rate continued to see a modest downside trend of around -0.2% throughout Wednesday morning due to Eurozone political concerns and ‘safe haven’ demand.
EUR CHF is unlikely to see a considerable shift in movement for the rest of Wednesday unless risk-sentiment changes. However, with US data also looking to be quiet, it’s unlikely to Euro will mount a recovery attempt until more influential Eurozone data is published.
[Published 11:30 GMT 08/02/2017]
The Euro Swiss Franc exchange rate has fallen this week as Eurozone political concerns and ‘safe haven’ demand left the Franc stronger. The pair is likely to continue to trend weakly in the coming days.
EUR CHF began the week trending just below the key level of 1.07 but was unable to maintain this level for long. By Wednesday, the pair had lost over half a rappen.
Euro (EUR) Remains Pressured by Eurozone Political Concerns
The Euro has performed poorly thus far this week due to a number of mid to long-term concerns.
Perhaps the most prevalent this week is the growing concern among investors that far-right French politician Marine Le Pen could win the French Presidential election this year.
Le Pen is known for her nationalist viewpoint and has indicated on multiple occasions that she would remove France from the Eurozone if she came into power. Some believe this could undermine the strength of the Euro or even cause the currency to collapse.
Long-term Eurozone concerns have also been worsened by this week’s comments from European Central Bank (ECB) President Mario Draghi.
In a speech earlier in the week, Draghi reasserted that inflationary pressures remained weak and that the bank would be willing to extend its aggressive quantitative easing (QE) measures into 2018 if necessary.
The dovish stance dampened hopes that the ECB was gradually moving towards a more neutral tone on monetary policy.
This week has also seen the Greek financial crisis taking headlines once again. Greece’s international bailout programme has concerned traders, causing yields on sovereign debt soar on worries about the disagreement between the Eurozone and International Monetary Fund (IMF) over what to do next for Greece.
Swiss Franc (CHF) Strengthens as Investors Look to ‘Safe Havens’
Demand for the ‘safe haven’ Swiss Franc has improved this week as concerns rise about long-term political and economic outlooks for many nations.
Concerns of instability amid the Trump US Presidency, UK Brexit process and of course Eurozone political elections in the year ahead have left riskier assets less appealing, bolstering the appeal of safer assets.
Unsurprisingly, prices of gold have also soared this week. The commodity is now trending at a three-month-high of over US$1,235 and as a result the gold-correlated Swiss Franc has also strengthened.
However, a stronger Swiss Franc presents its own issues. The currency is now near its best levels in 18 months and as a result, investors have become concerned that the Swiss National Bank (SNB) still considers a strong Franc to be an issue.
According to Jessica Hinds from Capital Economics;
‘While the SNB gave up its explicit currency ceiling two years ago, it has since intervened in FX markets on a fairly regular basis to keep the currency in check. Yet there have been no indications that this latest rise has provoked the bank to intervene.’
As a result, some analysts are hoping the SNB may be in a position to tolerate a stronger Franc now moreso than in the past. Recent Swiss data has also indicated that the nation is coping well despite CHF strength.
Euro Swiss Franc Forecast: Further Lows Ahead for EUR CHF?
The Euro Swiss Franc exchange rate is unlikely to make a significant recovery in the coming days, as Eurozone data is unlikely to be influential enough to inspire a Euro rally.
Thursday will see the publication of Germany’s December trade report, which is expected to see the nation’s trade surplus slip slightly. However, as the surplus remains high, a slip or a better-than-expected result is unlikely to cause much change in Euro movement.
Switzerland’s January unemployment rate will also be published on Thursday and is projected to worsen slightly from 3.5% to 3.6%.
This is unlikely to weaken the Franc however, particularly if gold prices remain strong and demand for ‘safe havens’ holds firm.
‘Safe haven’ demand could still slump before the end of the week however, if US data highly disappoints or a Federal Reserve official takes on a more dovish outlook on US interest rates. This kind of news could see EUR CHF recover slightly.
EUR CHF Interbank Rate
At the time of writing, the Euro Swiss Franc exchange rate trended in the region of 1.06, while the Swiss Franc Euro exchange rate traded at around 0.93.
