Checkout
Cart: $0.00 - (0 items )

Swiss franc sinks to 18-month low against euro

The Swiss franc dropped to its lowest level against the euro in 18 months on Wednesday, following a drop of 1.5 per cent in two days to trade as low as 1.1176, approaching the nadir set since the central back abandoned attempts to impose a currency floor in January 2015.

Market watchers said the recent gains reflected ongoing strength for the European single currency, and the next key test for the direction of market is the intraday low of 1.12 for the swiss franc set in February last year.

The moves come as traders continue to speculate about the timing for a withdrawal of emergency stimulus measures by the European Central Bank, at a time when Swiss policymakers still appear concerned with the threat of deflation.

Kamal Sharma, a foreign exchange strategist for Bank of America Merrill Lynch, said “there is a perfect storm now for the Swiss franc to continue to depreciate. Not only do you have policy divergence, but you also have strong economic data coming from the European economy.”

The move may also reflect less demand for safe assets, amid renewed confidence in the European project among international investors following the election of Emanuel Macron in France, and the resolution of problems at banks in Spain and Italy in recent weeks.

Peter Rosenstreich at the online bank Swissquote did not believe Swiss National Bank intervention had led to the Swissie’s weakness. “We see the current move as more of a technical move triggered by the break of critical psychological EURCHF resistance at 1.11. The monetary policy divergence story continues to gain traction. With the SNB clearly one of the banks not shifting towards normalisation anytime soon, CHF will remain under selling pressure.”