The Swiss franc’s fall is showing no signs of slowing down.
The continued rise of the euro on the back of strong economic data and an upbeat tone to global markets is weighing on the franc, traditionally a haven asset in times of market turmoil.
At pixel time, the euro is up by 0.7 per cent on the day at SFr1.1472 – a new post-limit low for the franc. The Swiss currency has fallen 4.2 per cent in the last 10 days as greater domestic demand for foreign assets and positive eurozone figures lured investors towards riskier assets.
Analysts at Goldman Sachs pointed out that the franc fell relative to all other G10 currencies in July.
They argue that much of the fall is due to the strengthening of the euro, and that “even though the Swiss economy faces financial stability concerns,” it does not expect the Swiss National Bank to change its stance.
The SNB should stay the course for now and developments in other G10 economies may well mean that the recent weakness in the franc extends further…These are important reasons for the SNB to stay the course for now and allow inflation to rebound as the currency weakness persists on the back of a decline in political risk, stronger Euro area and global growth, and fading deflationary risk.
(Second chart: Goldman Sachs)