Franc Strengthens as Slump in Stocks Spurs Demand

EUR/CHF Back in the 1.22’s


The Swiss Franc has reached its strongest level in almost 6 weeks against the euro as a slump in stocks has spurred demand for safer assets. Against sterling, the Franc is trading in the 1.44’s, having been up in the 1.49’s in early May. The Swiss National Bank set a ceiling of 1.20 per euro back in September 2011 to stop the currency strengthening too much as investors sought a safe-haven from the European debt crisis. Recently there has been speculation that the SNB would raise the ceiling to 1.25 in an attempt to aid competitiveness which has kept the franc’s gains in check.


The Stoxx 600 index has continued to slide today, on track for a fourth successive day of losses. The index has lost almost 4% this month alone, with investors concerned that the major central banks may start curtailing their stimulus measures which have been credited for the sharp rally earlier in the year.

“We’re still in a world where the main driver for market direction is what central banks are saying and doing, and you can’t ignore that. The past two-to-three weeks prove that,” said Neil Wilkinson, senior fund manager at Royal London Asset Management.

“The corporate news flow is quiet after the first-quarter earnings season ended, and with a lack of hard data, markets are prone to speculate about the Fed. Another key point is that volumes are thin, hence any moves are amplified,“ he added.

One of the major losers has been the Royal Bank of Scotland whose share price dropped 4.2% on Thursday, effectively wiping off £2 billion, after it was announced late on Wednesday night that Stephen Hester would be stepping down as CEO. Shares in other banks followed suit with the Spanish Banco Popular losing 4% and SocGen losing 1%.



As RBS is a publically owned institution, the news came as a blow to all taxpayers as a fall of that degree means the total value of all taxpayers shares has fallen by nearly £2 billion. To add insult to injury, the bank also announced that it would be cutting 2,000 from its investment arm. Investors are up in arms over the handling of Mr. Hester’s departure, with Investec analyst Ian Gordon saying:

“Despite a wholly unhelpful political and regulatory backdrop, Hester and van Saun have done an admirable job in terms of the ‘repair’ and restructuring of RBS.”

As s result, the Swiss currency gained support from a generally defensive mood surrounding global equity markets, tracking movements in the Japanese Yen which has also gained as a result of its status as a safe-haven. Interestingly, the Franc has remained resilient even as commodities prices have started to recover.

If you need to buy or sell Swiss Francs, or any other major currency, contact me today for a free consultation by filling out the form on the right.

Franc Strengthens as Slump in Stocks Spurs Demand

EUR/CHF Back in the 1.22’s


The Swiss Franc has reached its strongest level in almost 6 weeks against the euro as a slump in stocks has spurred demand for safer assets. Against sterling, the Franc is trading in the 1.44’s, having been up in the 1.49’s in early May. The Swiss National Bank set a ceiling of 1.20 per euro back in September 2011 to stop the currency strengthening too much as investors sought a safe-haven from the European debt crisis. Recently there has been speculation that the SNB would raise the ceiling to 1.25 in an attempt to aid competitiveness which has kept the franc’s gains in check.


The Stoxx 600 index has continued to slide today, on track for a fourth successive day of losses. The index has lost almost 4% this month alone, with investors concerned that the major central banks may start curtailing their stimulus measures which have been credited for the sharp rally earlier in the year.

“We’re still in a world where the main driver for market direction is what central banks are saying and doing, and you can’t ignore that. The past two-to-three weeks prove that,” said Neil Wilkinson, senior fund manager at Royal London Asset Management.

“The corporate news flow is quiet after the first-quarter earnings season ended, and with a lack of hard data, markets are prone to speculate about the Fed. Another key point is that volumes are thin, hence any moves are amplified,“ he added.

One of the major losers has been the Royal Bank of Scotland whose share price dropped 4.2% on Thursday, effectively wiping off £2 billion, after it was announced late on Wednesday night that Stephen Hester would be stepping down as CEO. Shares in other banks followed suit with the Spanish Banco Popular losing 4% and SocGen losing 1%.



As RBS is a publically owned institution, the news came as a blow to all taxpayers as a fall of that degree means the total value of all taxpayers shares has fallen by nearly £2 billion. To add insult to injury, the bank also announced that it would be cutting 2,000 from its investment arm. Investors are up in arms over the handling of Mr. Hester’s departure, with Investec analyst Ian Gordon saying:

“Despite a wholly unhelpful political and regulatory backdrop, Hester and van Saun have done an admirable job in terms of the ‘repair’ and restructuring of RBS.”

As s result, the Swiss currency gained support from a generally defensive mood surrounding global equity markets, tracking movements in the Japanese Yen which has also gained as a result of its status as a safe-haven. Interestingly, the Franc has remained resilient even as commodities prices have started to recover.

If you need to buy or sell Swiss Francs, or any other major currency, contact me today for a free consultation by filling out the form on the right.

Swiss Franc Benefits from Safe-Haven Demand

GBP/CHF Falls As Risk Appetite Shifts

The last couple of days have seen a marginal increase in Franc demand, triggered by weakness in commodities prices and falling equity markets. The ongoing speculation that the Swiss National Bank may raise the minimum euro level is having little impact in weakening the Swiss currency, although market players remain on high alert for any hints at a policy shift.

 
Sterling’s had a rough couple of days after weak manufacturing production data revealed a 0.2% contraction in the manufacturing sector over the last month. The figures are a leading indicator of overall economic health as production reacts quickly to ups and downs in the business cycle and is correlated with consumer conditions such as employment levels and average earnings.
 
 
 
The figures published by the Office for National Statistics dented hopes that a pick-up in industry would encourage balanced growth in the UK. The main factors behind the monthly drop, according to the ONS, were falls in transport equipment, wood and paper products and metals. However, they did say that in the three months to April manufacturing was actually up by 0.5% year on year and this should be considered a more accurate indicator of the underlying trend.
 
However, it wasn’t all doom and gloom as employment data on Wednesday revealed that jobless numbers declined by 5,000 in the three months to April as the economy returned to marginal growth. Figures released by the ONS showed that the total jobless number had fallen to 2.51 million and that the total number of people in employment had risen to 29.76 million, up 432,000 on a year ago.
 
 
 
As a result, sterling gained around 0.4% against the Franc after the figures were released but gains were quickly erased with profit taking pushing sterling back down to the low 1.44’s.
 
Sterling has actually traded relatively flat against the Franc and the Euro over the last 3 months, remaining within a two cent range against the euro. We were expecting some market movement last Thursday with meetings by both the Bank of England and the European Central Bank but even a speech by Mario Draghi failed to cause any sort of significant movement. The European Central Bank announced that they would be keeping the interest rate at 0.5%, but would consider a negative deposit rate should conditions deteriorate further. Draghi was fairly pessimistic about the economic recovery in the eurozone but market reaction was muted. The Bank of England announced that they too would be keeping interest rates on hold and would not be increasing the level of monetary easing. The meeting was Mervyn King’s last at the helm with Mark Carney taking the reins early in July.
 
 
 
If you need to buy or sell Swiss Francs, or any other currency, contact me today for a free, no obligation consultation by filling out the enquiry form on the right.


 
 
 
 
 

Swiss Franc Benefits from Safe-Haven Demand

GBP/CHF Falls As Risk Appetite Shifts

The last couple of days have seen a marginal increase in Franc demand, triggered by weakness in commodities prices and falling equity markets. The ongoing speculation that the Swiss National Bank may raise the minimum euro level is having little impact in weakening the Swiss currency, although market players remain on high alert for any hints at a policy shift.

 
Sterling’s had a rough couple of days after weak manufacturing production data revealed a 0.2% contraction in the manufacturing sector over the last month. The figures are a leading indicator of overall economic health as production reacts quickly to ups and downs in the business cycle and is correlated with consumer conditions such as employment levels and average earnings.
 
 
 
The figures published by the Office for National Statistics dented hopes that a pick-up in industry would encourage balanced growth in the UK. The main factors behind the monthly drop, according to the ONS, were falls in transport equipment, wood and paper products and metals. However, they did say that in the three months to April manufacturing was actually up by 0.5% year on year and this should be considered a more accurate indicator of the underlying trend.
 
However, it wasn’t all doom and gloom as employment data on Wednesday revealed that jobless numbers declined by 5,000 in the three months to April as the economy returned to marginal growth. Figures released by the ONS showed that the total jobless number had fallen to 2.51 million and that the total number of people in employment had risen to 29.76 million, up 432,000 on a year ago.
 
 
 
As a result, sterling gained around 0.4% against the Franc after the figures were released but gains were quickly erased with profit taking pushing sterling back down to the low 1.44’s.
 
Sterling has actually traded relatively flat against the Franc and the Euro over the last 3 months, remaining within a two cent range against the euro. We were expecting some market movement last Thursday with meetings by both the Bank of England and the European Central Bank but even a speech by Mario Draghi failed to cause any sort of significant movement. The European Central Bank announced that they would be keeping the interest rate at 0.5%, but would consider a negative deposit rate should conditions deteriorate further. Draghi was fairly pessimistic about the economic recovery in the eurozone but market reaction was muted. The Bank of England announced that they too would be keeping interest rates on hold and would not be increasing the level of monetary easing. The meeting was Mervyn King’s last at the helm with Mark Carney taking the reins early in July.
 
 
 
If you need to buy or sell Swiss Francs, or any other currency, contact me today for a free, no obligation consultation by filling out the enquiry form on the right.


 
 
 
 
 

GBP/CHF Falls as Sterling Weakens

Sterling Struggles Ahead of Mark Carney Appointment as BoE Governor

The pound has been on the back foot over the last 10 days in anticipation of Mark Carney taking over the reins at the Bank of England. It’s widely expected that the Canadian will adopt an aggressive monetary easing policy in an attempt to kick-start growth in the UK economy.


Pimco, the world’s largest bond house, has warned that Mark Carney will attempt to devalue the pound by as much as 15% in a last ditch effort to cement the UK recovery as it’s feared that growth in Britain is going to remain stagnant for the next three to five years as the government continue to shrink the public sector in an effort to reduce the budget deficit. It seems that the only policy tool left for the government to use is that of currency manipulation, devaluing sterling in the hope that it encourages exports. A weaker pound would also encourage UK companies to source supplies from within the UK, stimulating demand for UK products as foreign goods would become more expensive.

The Chancellor of the Exchequer, George Osborne, is pinning his hopes on Mark Carney to live up to his reputation as a monetary activist by pursuing a fairly aggressive monetary easing policy, ie. through quantitative easing to try and stimulate an export-led recovery rather than relying on consumer spending.



“I think a lot of what Mark Carney is going to do – clearly he’s not going to state this upfront – is to try and keep sterling certainly from going up and, probably, he’s going to want to see it go lower,” Mr Amey, of Pimco, said. “On a trade weighted basis I think another 10pc to 15pc is manageable.

Quantitative Easing will almost certainly weaken sterling as it is essentially a money printing programme. Of course, flooding the economy with freshly printed sterling will inevitably lower its inherent value, weakening the currency making domestic products cheaper for foreign buyers. The last time an additional round of Q.E. was announced sterling weakened significantly. The same can be said for the dollar when the Federal Reserve announced their aggressive policy. As a result, sterling has already begun losing ground against its major counterparts, including the Swiss Franc.

On the Swiss side of things the Franc has recently been supported by defensive demand, benefitting from its status as a safe-haven currency. However, demand has been kept in check by concerns that the Swiss National Bank may indeed lower its euro minimum level to 1.25 in an attempt to increase competitiveness.

Considering the continuing uncertainty in Switzerland, the eurozone and the UK, now may be the time to assess your options if you need to buy or sell Swiss Francs over the coming months. Contact me today by filling out the enquiry form on the right to find out how you can limit your exposure to adverse movements in the currency markets.


GBP/CHF Falls as Sterling Weakens

Sterling Struggles Ahead of Mark Carney Appointment as BoE Governor

The pound has been on the back foot over the last 10 days in anticipation of Mark Carney taking over the reins at the Bank of England. It’s widely expected that the Canadian will adopt an aggressive monetary easing policy in an attempt to kick-start growth in the UK economy.


Pimco, the world’s largest bond house, has warned that Mark Carney will attempt to devalue the pound by as much as 15% in a last ditch effort to cement the UK recovery as it’s feared that growth in Britain is going to remain stagnant for the next three to five years as the government continue to shrink the public sector in an effort to reduce the budget deficit. It seems that the only policy tool left for the government to use is that of currency manipulation, devaluing sterling in the hope that it encourages exports. A weaker pound would also encourage UK companies to source supplies from within the UK, stimulating demand for UK products as foreign goods would become more expensive.

The Chancellor of the Exchequer, George Osborne, is pinning his hopes on Mark Carney to live up to his reputation as a monetary activist by pursuing a fairly aggressive monetary easing policy, ie. through quantitative easing to try and stimulate an export-led recovery rather than relying on consumer spending.



“I think a lot of what Mark Carney is going to do – clearly he’s not going to state this upfront – is to try and keep sterling certainly from going up and, probably, he’s going to want to see it go lower,” Mr Amey, of Pimco, said. “On a trade weighted basis I think another 10pc to 15pc is manageable.

Quantitative Easing will almost certainly weaken sterling as it is essentially a money printing programme. Of course, flooding the economy with freshly printed sterling will inevitably lower its inherent value, weakening the currency making domestic products cheaper for foreign buyers. The last time an additional round of Q.E. was announced sterling weakened significantly. The same can be said for the dollar when the Federal Reserve announced their aggressive policy. As a result, sterling has already begun losing ground against its major counterparts, including the Swiss Franc.

On the Swiss side of things the Franc has recently been supported by defensive demand, benefitting from its status as a safe-haven currency. However, demand has been kept in check by concerns that the Swiss National Bank may indeed lower its euro minimum level to 1.25 in an attempt to increase competitiveness.

Considering the continuing uncertainty in Switzerland, the eurozone and the UK, now may be the time to assess your options if you need to buy or sell Swiss Francs over the coming months. Contact me today by filling out the enquiry form on the right to find out how you can limit your exposure to adverse movements in the currency markets.


GBP/CHF Rises After Mervyn King Speech

Sterling Strengthens After Bank of England Inflation Report

The pound has continued its recent run against the Swiss currency today after a speech by the current Governor of the Bank of England, Mervyn King, in which he said that economic recovery is finally in sight. “It was not a typical recession and it will not be a typical recovery, nevertheless a recovery is in sight.”


King reckons Gross Domestic Product, an aggregate of everything produced and consumed in the UK, will strengthen to a healthy half a percent in the next quarter, up from 0.3% for the first quarter. He’s forecasting a gradual improvement in the growth figures over the next 6 quarters and reckons that we may be exiting the worst slump since the Great Depression of the 1930’s.



It’s the first time the Central Bank has revised upwards its growth forecast since the current economic crisis began in 2008. The Bank’s optimistic Inflation Report comes after a recent consumer sentiment poll revealed that optimism over the UK’s economic outlook has surged, with 30% of the country’s population now expecting the country to be better off in 12 months time, up from 22% last month. George Osborne must be breathing a sigh of relief after 3 years of continuous gloom since the Coalition came into power.

The Bank also said that inflation was not rising as much as had intially been feared and that the interest rate would remain below one percent for at least another four years.

Despite the recent run of positive data, some economists are not convinced that we’ve seen the back of the recession. With one eye on his legacy and one on the economy, the temptation for Sir Mervyn to look for positives must have been overwhelming. The recovery may be ‘in sight’, but only if you’re looking through a telescope.

The rise in GBP/CHF is not entirely due to a strengthening pound. The franc has weakened significantly over the last week as investors move away from defensive assets. There is also still some specualtion that the Swiss National Bank are on the verge of raising the minimum euro level to 1.25 in an attemp to increase competitiveness. As a result, GBP/CHF has broken through the 1.47 mark and EUR/CHF was briefly trading above 1.25.


If you’re looking to buy or sell Swiss Francs, or any other major currency, contact me today by filling out the enquiry form on the right.

GBP/CHF Rises After Mervyn King Speech

Sterling Strengthens After Bank of England Inflation Report

The pound has continued its recent run against the Swiss currency today after a speech by the current Governor of the Bank of England, Mervyn King, in which he said that economic recovery is finally in sight. “It was not a typical recession and it will not be a typical recovery, nevertheless a recovery is in sight.”


King reckons Gross Domestic Product, an aggregate of everything produced and consumed in the UK, will strengthen to a healthy half a percent in the next quarter, up from 0.3% for the first quarter. He’s forecasting a gradual improvement in the growth figures over the next 6 quarters and reckons that we may be exiting the worst slump since the Great Depression of the 1930’s.



It’s the first time the Central Bank has revised upwards its growth forecast since the current economic crisis began in 2008. The Bank’s optimistic Inflation Report comes after a recent consumer sentiment poll revealed that optimism over the UK’s economic outlook has surged, with 30% of the country’s population now expecting the country to be better off in 12 months time, up from 22% last month. George Osborne must be breathing a sigh of relief after 3 years of continuous gloom since the Coalition came into power.

The Bank also said that inflation was not rising as much as had intially been feared and that the interest rate would remain below one percent for at least another four years.

Despite the recent run of positive data, some economists are not convinced that we’ve seen the back of the recession. With one eye on his legacy and one on the economy, the temptation for Sir Mervyn to look for positives must have been overwhelming. The recovery may be ‘in sight’, but only if you’re looking through a telescope.

The rise in GBP/CHF is not entirely due to a strengthening pound. The franc has weakened significantly over the last week as investors move away from defensive assets. There is also still some specualtion that the Swiss National Bank are on the verge of raising the minimum euro level to 1.25 in an attemp to increase competitiveness. As a result, GBP/CHF has broken through the 1.47 mark and EUR/CHF was briefly trading above 1.25.


If you’re looking to buy or sell Swiss Francs, or any other major currency, contact me today by filling out the enquiry form on the right.