FOREX: Swiss franc rapidly returns to favour

Last week was one of the worst for the Swiss franc for a couple of years, but that blip has been quickly forgotten with a rapid return of buying interest over recent days. This should hardly be a surprise given the ongoing sovereign debt crisis in Europe and the desire by savers in the likes of Greece, Portugal and Spain to protect their wealth by moving it to a safe harbour. EUR/CHF, which started the week above 1.23, has traded below 1.20 this morning. It remains difficult to dislike the Swiss franc, notwithstanding its strength over recent quarters.

Europe remains in a huge pickle over how to respond to the sovereign debt crisis, with the contagion spreading on a daily basis. Washington remains incapable of dealing with the country’s enormous fiscal deficit at a time when the debt limit is about to be reached; and Japan’s finance minister has warned that the country might run out of money soon if the Parliament fails to authorise bond sales. The SNB may wish that the currency would simply tread water for a time, although the currency’s buoyancy has helped to contain inflation, as confirmed once again by the latest figures released this morning. Right now, it is not clear why the Swiss franc would weaken any time soon.(FxProNews)