Record Low for Euro-Swiss Franc Rate

Posted on | June 29, 2010 |

Looking at yesterday’s markets there were no major news items to speak of so moves appear to be a case of markets falling in line with the path of least resistance…down.

There are two key trends to be aware of:

1. Weakness in the Euro

It’s a big week for Europe with Germany electing a new president on Wednesday and the EC publishing its scorecard on how it will measure economic policies.

The scorecard will attempt to stop disasters such as Greece before they snowball. The missing link so far has been enforcement of any such laws. The question is whether the scorecard and measures will highlight any current failings or bush known issues under the carpet.

Ahead of all this, the euro is sinking once again. The EUR/USD is down 0.43%, the EUR/GBP down 0.56% and the EUR/JPY down 0.51%. Also see Forex Spread Betting.

2. Demand for Swiss Francs

Recently the Swiss National Bank intimated that it would be stopping its attempts to keep a lid on the Swiss Franc and let it trade without intervention. So far it looks as it is keeping to its word with the Swissy fast regaining its ‘safe’ currency status.

With the national bank interventions, the Swissy was trading closely with the euro, but in recent weeks the two currencies have been rapidly dislocating.

Yesterday afternoon the EUR/CHF hit a new record low, down 1.29%. Even if you create a synthetic euro from the old Deutschmark, the current moves are the biggest dislocation for generations.

The USD/CHF is also selling off as investors find the Swissy a safer harbour than the debt laden US dollar.

However, there’s still some way to go before previous lows from 2008 are breached.

By David Evans, Market Analyst, BetOnMarkets.

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