CHF Exchange Rate Remains Stable After Good Run Before Holidays

CHF Exchange Rate Remains Stable After Good Run Before Holidays

28 December 2021

The Swiss franc had some good exchange rate before Christmas, but now the currency remains stable, trading around 1.04 versus euro and 0,92 versus USD.

Trading Steadily

              The Swiss franc is known worldwide as safe-haven assets, which means investor tend to buy Swiss francs in times of difficult economic situation as a good store of value. That is why CHF had very strong exchange rate last year in times of the pandemic. Despite some better economic situation in the beginning of the year and more steady CHF exchange rate, the end of 2021 saw it appreciating  again. Euro versus CHF hit some of lowest points in years, heading closer to the psychological threshold of 1.03, prompting speculations it might be close to parity in next two years. Before Christmas the pair EUR/CHF also headed down, but after holidays it is trading steadily. It should end the year at the level of 1.04.

The Omicron Variant

              The steady exchange rate of CHF might come now as a surprise, as globally situation is far from perfect. The Omicron variant of the coronavirus is continuing to spread worldwide and many countries are in the heat of battling another COVID-19 wave, introducing new harsh measures. However, there are also some good news: it appears that Omicron is milder variant than Delta, that was very deadly. It might cause less disruption than Delta, though still this variant is highly contagious and poses serious health scare for the unvaccinated people. These could potentially led to overload of hospitals.

Sensitive Markets

              Nowadays markets, including forex one, are very sensitive to the global situation, reacting suddenly to new variants of the coronavirus, lockdowns and etc. It can be especially observed in period of holidays, and at markets marked by liquidity. Sharp moves are observed now in exchange rates of risk currencies like the Australian dollar. CHF or USD, known as safe-haven assets, are showing less volatility. The equity markets are rising, after reports that the Omicron version is less severe that the Delta one plus it might not impact consumer spending so much as it was feared. The US consumer spending and unemployment are both quite low right now. Markets awaits the FED’s decision on hike rates in March, now with 53% change of 25-bps hike as prices bet by Fed Watch. That issue is not yet as captivating for investors and markets’ attention as the Omicron variant.

Not Much Going On

              Apart form the Omicron variant, there is not much influencing markets these days, as the economic calendar is not action-packed. The only significant events would be publication of Credit Suisse Economic Expectations on Wednesday and the KOF Economic Barometer on Thursday, that can potentially shake things up a bit for CHF exchange rate.