The Swiss franc tumbled today as the improving geopolitical situation made traders to lighten up some of their positions in safe assets, including the Swissie. The Japanese yen, another currency that is perceived to be safe, was even weaker, falling against its Swiss counterpart.
The situation in Eastern Europe improved, allowing investors to take a breath and shed some of their positions in safe currencies. The franc fell because of this, but the yen was even a bigger loser, falling against all other most-traded currencies.
Of course, franc’s performance is also limited by the cap of 1.20 per euro introduced by the Swiss National Bank. SNB President Thomas Jordan said in January:
We say in fact the minimum exchange rate remains as long as necessary. We have to ensure adequate monetary conditions. For the time being, this is the minimum exchange rate.
The franc may yet receive a boost from domestic fundamentals, which were relatively good so far. The SVME Purchasing Mangers’ Index rose from 56.1 in January to 57.6 in February, exceeding analysts’ projections. It is expected that the report released on Friday will show that deflation turned into inflation last month.
USD/CHF advanced from 0.8830 to 0.8872 as of 22:15 GMT today, while EUR/CHF surged from 1.2127 to 1.2192. At the same time, CHF/JPY rose from 114.84 to 115.22.
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