Euro Falls 3% Against Swiss Franc

The euro continued its fall in value against the dollar, pound sterling and the Swiss franc in trade on Wednesday.

The euro/ Swiss franc dropped to its lowest level since March 23, falling 0.3 percent to 1.1616 francs per euro.

Against the yen the dollar fell 0.6 percent and 0.3 percent against the Swiss franc, but gained against a basket of currencies by 0.2 percent to 93.76.

Euro Risk Appetite

Over the recent weeks the euro has been pressurised by political concerns on the coalition between Italy’s 5-Star Movement and the far-right league. News that both parties are in favour of exiting the Eurozone has raised concerns of discord with the European Union.

Italian 10-year yields gained 60 basis points since the beginning of May, most of which was during the past week.

German PMI Falls

Also pressurising the euro was the release of data that showed that the private sector activity was at its slowest expansion since September 2016 with both manufacturing and services easing. The IHS Markt Germany Composite PMI fell from 54.6 in April to 53.1 in May, below forecasts of 54.7

Currency strategist at Societe Generale in London, Alvin Tan said that there may be a further downside for the euro/franc with investors placing a growing risk premium on the euro.

According to strategists at Morgan Stanley there could be added further pressure on the euro prompting investors overseas to hedge their equity investments and bonds in Europe.

Staying in Europe, the European Commission President Jean-Claude Juncker who was attending an event on Monday in Germany reportedly said that the French spend too much money in the wrong places, highlighting France’s high spending.

European Trading

Most European indices were in the red on Wednesday with the CAC 40 index in Paris slipping 1 percent.

New York Trading

Markets in New York were similar with the S&P 500 and the Nasdaq losing ground, following President Trumps remarks that he was not happy with the talks on trade between China and the U.S.

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Traders Look for Safe Haven

The Japanese yen rose following Trump’s remarks as investors sought a safe haven (which often rises in times of global instability).

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Focus on Fed

Investors are now focusing on the Fed minutes which were released on Wednesday where interest rates were left unchanged.

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