CHF Up as Euphoria on COVID-19 Vaccine Chills16 November 2020
CHF exchange rate was up on Friday, as optimism over COVID-19 chilled and investors’ risk appetite disappeared. On Monday good mood came back to markets, but CHF was still strong.
After very good exchange rates of risk-driven currencies, including euro, during the last week after news on COVID-19 vaccine progress and Joe Biden’s victory in US residential elections, investors’ mood for risk has chilled on Friday. That sent up safe-have currencies, with JPY and CHF exchange rate going strong. Also the threat of another wave of COVID-19 infections spreading though US and Europe is lingering over financial markets and making investors less eager to risk and more prone to buy Swiss francs or Japanese yens, considered safe-haven assets. Also, influencing the mood on markets were the comments from the US Federal Reserve and the European Central Bank that economic outlook is still uncertain with COVID-19. On Friday, the Swiss franc strengthened to 0.9132 against the USD, whereas the USD went down versus the Japanese yen by 0.46%. The euro was even up against the USD – by 0,24%. Risk-driven USD went down versus the basket of currencies by 0.23%.
Back to Good Mood on Monday
On Monday, global markets of currencies and stocks went back to good mood, as Pfizer Inc said experimental vaccine was more than 90% effective in trials and strong economic data came from Asia. The euro inched a bit higher, despite the fears of rising cases of COVID-19. It was up 0.3% versus USD, hitting one-week high of 1.1869. The US dollar remained flat. Meanwhile the most movers in G10 currencies were still CHF and JPY, as investors remain cautious and many of them still see these safe-haven currencies as the only option for long-term investments. The Swiss franc exchange rate remained good.
What is Next for Currencies?
Until the vaccine for COVID-19 is available, moods on currencies and stock markets can change depending on the day. There is hope for progress, but at the same time still a lot of threats and many economies nevertheless will suffer from lockdown – including the whole euro-zone. When it comes to euro, investors are more confident that the economic aid package from the EU will arrive soon – which is more probable than that the divided US Congress will agree finally on some sort of help, thus euro can at times have better exchange rate than USD. The launch of active financial stimulus can activate markets even more than COVID-19 vaccines. In the long-run experts predict that growth and trade-sensitive currencies will be winners on FX market.