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28 Aug 2014
EUR/CHF extends losses to fresh multi-month lows
FXStreet (Córdoba) - The EUR/CHF came under renewed pressure Thursday and extended losses below yesterday’s base at the 1.2060 area, printing its lowest level since December 2012.
The euro weakened across the board and fell to a fresh 20-month low of 1.2053 versus the franc after Eurozone economic sentiment came in below expectations. At time of writing, the EUR/CHF is trading at 1.2055, down 0.09% on the day.
Expectation for ECB policy might threaten the sustainability of EUR/CHF floor
From a broader perspective, Peter A Rosenstreich, analyst at Swissquote Bank commented that EUR/CHF below 1.2100 suggests a test of the SNB floor at 1.2000. "Recent central banks rhetoric indicates that the level will be protected by unlimited funds as inflation shows no signs of increasing. However, with a bloated balanced sheet any defence will have to rely on negative interest rates on top of pure CHF selling. That said full blown ECB asset purchase in the tune of €1 or €2trn level will create doubt on the sustainability of the minimum exchange rate", said the analyst. "SNB member must be praying right now for a spike in US wage growth."
The EUR/CHF has been under increasing pressure this month, having lost more than 100 pips or 0.92% in August, which is outstanding for a cross that only moves a few pips ever since the SNB placed a floor back in September 2011
The euro weakened across the board and fell to a fresh 20-month low of 1.2053 versus the franc after Eurozone economic sentiment came in below expectations. At time of writing, the EUR/CHF is trading at 1.2055, down 0.09% on the day.
Expectation for ECB policy might threaten the sustainability of EUR/CHF floor
From a broader perspective, Peter A Rosenstreich, analyst at Swissquote Bank commented that EUR/CHF below 1.2100 suggests a test of the SNB floor at 1.2000. "Recent central banks rhetoric indicates that the level will be protected by unlimited funds as inflation shows no signs of increasing. However, with a bloated balanced sheet any defence will have to rely on negative interest rates on top of pure CHF selling. That said full blown ECB asset purchase in the tune of €1 or €2trn level will create doubt on the sustainability of the minimum exchange rate", said the analyst. "SNB member must be praying right now for a spike in US wage growth."
The EUR/CHF has been under increasing pressure this month, having lost more than 100 pips or 0.92% in August, which is outstanding for a cross that only moves a few pips ever since the SNB placed a floor back in September 2011