Forex - Euro higher vs. Swiss franc amid SNB intervention speculation
Investing.com
Published Feb 05, 2015 08:05AM ET
Euro's gains against Swiss franc fuel SNB intervention talk
Investing.com - The euro rose to the highest level against the Swiss franc on Thursday since the Swiss National Bank scrapped its exchange rate cap last month, fuelling speculation that the Swiss National Bank was actively weakening the franc.
EUR/CHF was last up 0.73% to 1.0582, the highest level since January 15.
The euro has been floating freely against the Swiss franc since Switzerland’s central bank scrapped its three-and-a-half year old 1.20 per euro exchange rate cap in a shock move last month.
The announcement came a week before the European Central Bank unveiled a €60 billion a month government bond purchasing program aimed at combatting the threat of deflation in the euro zone.
The ECB’s quantitative easing program would have sparked increased demand for the safe haven franc, prompting the SNB to conclude that enforcing and maintaining the cap was no longer justified.
The SNB has indicated that it is still prepared to intervene in currency markets, even after abandoning its cap.
Over the weekend, Swiss media reported that the SNB is now unofficially targeting an exchange rate of 1.05 to 1.10 francs per euro.
Figures from the SNB on Monday showed that sight deposits rose for a second consecutive week last week, indicating that the bank has been purchasing foreign currency in the market.
The single currency had weakened broadly in the previous session after the European Central Bank it would no longer accept Greek government bonds as collateral for lending.
The move shifted the burden on to Greece’s central bank provide additional liquidity for its lenders and increased pressure on the new Greek government to reach a fresh agreement with its lenders on the terms of its current €240 billion bailout.
In other trade, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.44% to 94.16, pressured lower by strength in the euro.
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Written By: Investing.com
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