Demand has been limited for both the Euro and the Swiss Franc exchange rates at the start of the week, with little particular reason for investors to favour one currency over the other at this juncture.
Foreign exchange investors were not impressed to find that the latest Eurozone Industrial Production results had fallen short of forecast, with output unexpectedly contracting on the month in May.
This gave markets little reason to favour the Euro on Wednesday, particularly as safe-haven demand continued to shore up the Swiss Franc.
The euro has advanced against the Swiss franc on Tuesday, mainly due to commodity costs.
Elsewhere, the Euro has fallen overall, due to concerns that Italy’s banking infrastructure may be groaning under the weight of its debts.
The gain against the Franc potentially stems solely from the cost of gold dropping off on the global market.
Even though there was no surprise from the finalised German inflation data the euro to Swiss franc exchange rate made fresh gains nevertheless.
However, if the afternoon’s US data proves stronger then the single currency is likely to return to a generally weaker footing.
June’s US Non-Farm Payrolls report helped to shore up the Euro to Swiss Franc (EUR/CHF) exchange rate ahead of the weekend, despite a much stronger headline figure than investors had anticipated.
As underling wage growth and participation data pointed towards continued weakness within the US economy the Euro (EUR) was able to benefit from the renewed bearishness of the ‘Greenback’.
With the Federal Reserve still seeming unlikely to raise interest rates before the end of the year investors were inclined to return to higher-yielding assets, denting the safe-haven Swiss Franc (CHF) in turn.
Latest Euro Exchange Rates
On Saturday the Swiss Franc to British Pound exchange rate (CHF/GBP) converts at 0.888
The pound conversion rate (against swiss franc) is quoted at 1.126 CHF/GBP.
The live inter-bank GBP-USD spot rate is quoted as 1.237 today.
At time of writing the pound to japanese yen exchange rate is quoted at 191.248.
NB: the forex rates mentioned above, revised as of 20th Apr 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.
It was a rather quiet start to the week for both the Euro and the Franc, with little in the way of major domestic data available to drive movement.
As a result, with markets still in a largely risk averse mood, the EUR/CHF exchange rate remained on a narrow trend throughout much of Monday’s European session.
Investors are still showing concern over the outlook of the Eurozone, particularly as worries remain as to the future of the struggling Italian banking sector.
Euro uncertainty was also provoked by anxiety ahead of the Eurogroup’s decision on the status of the Spanish and Portuguese budgets, as researchers at BBH noted:
‘They will decide if Spain and/or Portugal should be sanctioned for the excessive deficits the EU judged. The sanctions could include fines and the suspension of some regional funds. If the rules are not enforced, they lose credibility. If they are enforced, it appears discretionary and selective. Consider that despite repeated violations and expressions of concern, the German external imbalance has not been addressed.’
Safe-Haven Demand Could Keep Franc on Stronger Footing
Swiss data will remain limited over the coming week, with safe-haven demand and gold price developments likely to form the primary causes of movement for the currency.
If market risk appetite remains strong then the Franc is expected to struggle, although a greater resurgence in fears over Brexit or a Chinese slowdown could prompt investors to pile back into the safe-haven asset.
Signs of political spill-over from the UK’s referendum into Europe are unlikely to negatively impact the Franc, with the EUR/CHF exchange rate expected to remain under pressure for the foreseeable future thanks to concerns over the integrity of the currency union.
Weaker Eurozone Data Likely to Push EUR/CHF Exchange Rate Lower
Tuesday’s finalised German Consumer Price Index for June is not predicted to cause particular volatility for the Euro, with markets not anticipating any change from the provisional reading.
However, the outlook of the single currency is likely to remain weak if the latest Eurozone Industrial Production figures point towards a greater slowdown in the local economy.
Any signs of softness in the Eurozone should see the EUR/CHF exchange rate returning to a more marked downtrend, even though it still seems unlikely that the European Central Bank (ECB) will be prompted to ease policy further in the near future.