The Euro to Swiss Franc (EUR/CHF) exchange rate strengthened by around 0.26% on Tuesday morning.
With German Retail Sales data producing a positive result, the common currency edged higher versus many of its major peers. The advance has been sluggish, however, as traders fear that Greece will require further extension to their bailout program.
The Swiss Franc, meanwhile, softened despite positive Growth data. This is because the Swiss National Bank (SNB) is being closely scrutinised after their shock Eurocap removal several weeks ago. The Swiss government are questioning the viability of an independent central bank, although the Franc’s declination will favour the Swiss institute.
The Euro to Swiss Franc (EUR/CHF) exchange rate is currently trending in the region of 1.0745.
Yesterday…
The Euro to Swiss Franc (EUR/CHF) exchange rate advanced by around 0.57% on Monday afternoon.
As the European Central Bank (ECB) prepares to inject €1 trillion into the Eurozone, the shared currency strengthened versus many of its major peers. This is due to the fact that there were mounting fears that it wouldn’t be a viable option as the ECB struggled to source bonds. Additional gains are as a result of positive domestic data.
The Swiss Franc, conversely, softened after the Swiss National Bank (SNB) came under intense scrutiny as it struggles to devalue the ‘Swissie’ (CHF). With the value of an independent central bank being called into question by the Swiss government, fears of a dramatic change in policy has seen demand for the Franc wane significantly.
The Euro to Swiss Franc (EUR/CHF) exchange rate is currently trending in the region of 1.0733.
Euro (EUR) Exchange Rate Gains on Positive Data
European data printed relatively positively on Monday, which allowed the common currency to advance versus many of its most traded currency competitors. Of most significance, in terms of its weighting to provoke market movement, was Eurozone inflation data. The Eurozone Consumer Price Index came in at -0.3% for February’s estimate, bettering the median market forecast of -0.5%. In addition, the Eurozone Core CPI met with the market consensus of 0.6%.
Another significant boost for the common currency was the Eurozone Unemployment Rate, which came in at 11.2%; a positive declination from estimates of 11.4% of European citizens without a job. ‘A double dose of good news for the Eurozone. This may dilute fears that pervasive deflation could become entrenched in the Eurozone with long-term debilitating growth effects,’ said Howard Archer, economist at IHS Global Insight.
‘The further drop in unemployment should be supportive to Eurozone consumers and they are benefiting from the boost to their purchasing power coming from deflation,’ added Archer.
The Euro to Swiss Franc (EUR/CHF) exchange rate has dropped to a low of 1.0647 today.
Swiss Franc (CHF) Exchange Rate Dives after Manufacturing Disappoints
Swiss Manufacturing PMI was forecast to advance from 48.2 to 49.17, but the actual result cooled to 47.3. ‘Order books became thinner for the second month in succession, although the momentum slowed down somewhat,’ said analysts at Credit Suisse Group AG, which co-compiled the index.
A large percentage of the Franc’s declination is not due to cooling factory output, however, but the result of ongoing damp sentiment towards the SNB after their surprise Eurocap removal over 6-weeks ago. The Swiss government are now calling into question the viability of having an independent central bank. Another key issue is that the SNB’s policymakers are only a committee of three, much lower in comparison to other major central banks.
‘The debate about the national bank is absolutely central. This Achilles heel is currently the greatest risk for Switzerland as a place of business,’ said Nick Hayek, CEO of Switzerland’s Swatch Group.
Euro to Swiss Franc (EUR/CHF) Exchange Rate Forecast to Hold Advance
Given that European data produced positive results, and sentiment towards the SNB is dwindling rapidly, the Euro to Swiss Franc (EUR/CHF) exchange rate is likely to hold gains for the remainder of Monday.
Tuesday is likely to see EUR/CHF volatility with German Retail Sales and Swiss growth data due for publication.
The Euro to Swiss Franc (EUR/CHF) exchange rate has climbed to a high of 1.0747.
