Euro to Swiss Franc (EUR/CHF) Exchange Rate Forecast to Soften on Safe-Haven Demand

Despite the fact that the past week has seen several unscheduled meetings to attempt to secure a deal for Greece to unlock bailout funds, there has been seemingly no progress made. The division between Greece and its creditors is widening with officials butting heads over reforms that compromise Syriza’s electoral red lines. Greece only has until Tuesday before it owes the International Monetary Fund (IMF) a large sum of consolidated payments due over the course of this month. Should they fail to secure aid, the Hellenic nation would not only default on loan payments but also risk losing the life-support from the European Central Bank (ECB) which is keeping Greek banks afloat. Greek and Eurozone officials will be meeting on Saturday for yet another unscheduled emergency meeting.

Given the many risks facing Greece if they fail to bridge gaps, many analysts are predicting that Greece will be forced into accepting whatever proposal is made to them on Saturday. This has seen the shared currency avoid significant declination. The trouble is, if Prime Minister Alexis Tsipras bows to austerity measures that compromise electoral red lines, he faces a serious backlash from his own party members. Similarly, if European officials take it easy on Greece they risk a contagion as other small economies would seek the same. What is more, the deal has to be accepted by German officials who have thus far been unhappy with Greece’s lack of compromise with reformation.

The Euro to Swiss Franc (EUR/CHF) exchange rate dived by around -0.52% on Friday.

Yesterday the ‘Swissie’ (CHF) dived versus its peers after Swiss National Bank (SNB) Chairman of the Governing Board, Thomas Jordan, repeated the view that the Swiss Franc is significantly overvalued. He warns that policy easing is still on the cards with geopolitical upheaval in Europe causing the ‘Swissie’ to advance. ‘In the current climate there is, regrettably, no easy solution that would absorb all external disruptions,’ Mr. Jordan said. ‘We must accept these challenging economic conditions for the time being.’

Despite frequent complaints about overvaluation, the Swiss Franc has remained resiliently high since the SNB shocked the market by removing its Euro cap. This is generally the result of heightened demand for safe-haven assets as the situation in Greece weighs heavily on trader risk-appetite. With the US economy showing signs of weakness, safe-haven seekers have invested heavily in the ‘Swissie’. This has been the case during Friday’s European session as the Franc appreciates despite a complete absence of domestic data.

The Euro to Swiss Franc (EUR/CHF) exchange rate is currently trending in the region of 1.0441, having traded within the region of 1.0416 – 1.0493.