The Swiss franc stayed stubbornly above the 1.47 mark against the euro on Monday as traders took stock of the Swiss National Bank's apparently limited ability to keep a lid on the currency against an ever weakening euro. The euro zone is Switzerland's largest trading partner but the single currency has been slammed by concerns about ballooning debts in Greece, Spain and Portugal, boosting the franc higher despite mooted SNB intervention.
Bullishness on the Swiss economy was also bolstered by a better-than-expected unemployment report on Monday. "It will be a quiet week in terms of data and events globally, so foreign exchange markets will again be driven by risk sentiment," said Deutsche Bank economist Henrik Gullberg. "As long as risk aversion remains high, it will be supportive of the franc, so I don't think the downward pressure on the euro will go away."
Traders are now focused on deficit concerns in the euro area, said Gullberg, keeping risk aversion at high levels. Also the franc is supported by the country's strong fundamentals, in sharp contrast to many European Union countries, he said. "A possible intervention on EUR-CHF already materialised last week, suggesting that concrete action may occur again close to the new rumoured pain threshold for the SNB at 1.45," UniCredit said in a note.
The franc was down marginally against the euro, trading at 1.4684 per euro versus 1.4661 late on Friday. The franc also traded slightly down against the dollar at 1.0743 per dollar and remained close to its lowest level since August after a better-than-expected US jobs update boosted sentiment in the United States on Friday.
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