The Swiss franc today extended last week’s rally against the US dollar as a cautious mood in the European stock markets drove investors to the safe-haven currency. The USD/CHF currency pair also benefitted from the greenback’s slump following the dovish FOMC rate decision on Wednesday as the Fed hinted at future rate cuts.
The USD/CHF currency pair today dropped from a high of 0.9783 in the early European session to a low of 0.9705 in the American session and was near these levels at the time of writing.
The currency pair opened today’s session attempting to rally following last week’s massive fall, but could not sustain its gains into the European session. The pair reversed course in the early European session as traders bought the Swiss franc causing it to rally against the US dollar. However, the franc’s gains were limited by the current tensions between the European Union and Switzerland over the pending framework agreement. The Swiss government is opposed to the framework agreement, which is supposed to govern relations between the two bodies.
The Swiss do not want to sign an agreement that will lead to an influx of low-wage EU workers into the country. The EU has refused to budge and has said that it will not renegotiate the framework despite the upcoming June 30 expiry of the stock market equivalence program.
The currency pair’s future performance is likely to be affected by investor sentiment and tomorrow’s US CPI data.
The USD/CHF currency pair was trading at 0.9731 as at 17:11 GMT having fallen from a high of 0.9783. The EUR/CHF currency pair was trading at 1.1084 having dropped from a high of 1.1130.
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