Afternoon analysis 26.07.2017

26.07.2017 15:06|Marcin Lipka

The noticeable weakening of the franc on the global market. Calm quotes of the EUR/USD before the Federal Reserve meeting. The zloty has not responded to a message from the European Commission. The EUR/PLN has still been close to 4.26. The CHF/PLN has been lowered to 3.82.

The franc has been close to new lows

Around midday, there was a strong weakening of the franc in the broader market. The Swiss currency in relation to Europe one has lost less than 1 percent of value. This has also led to an increase in the EUR/CHF pair to around the 1.1170-80 border and reaching the highest levels in a year.

In addition, it is worth noting, that there were only about 20 pips to set EUR/CHF value records since the second half of January 2015. Therefore, since the decision to liquidate the stable EUR/CHF exchange rate was given (of 1.20) by the Swiss National Bank.

Today, there were no special reasons that the Swiss currency has been pushed down. On Monday, SNB boss Thomas Jordan, in an interview for Le Temps, said, "we still think that the franc is clearly revalued by our models and indicators."

Likely, the investors' view may be affected by the fact that the Swiss currency has been losing its glitter as a "safe heaven." The radical decreasing risk of the euro area’s disintegration and the increasing chances of leaving a negative interest rate policy in the eurozone may significantly reduce the attractiveness of the Alpine country's assets. In turn, it is possible that wallet investors, counting on the SNB to maintain the extremely mild monetary policy, will begin to use francs more widely in the "carry trade" strategy. This could be another reason for the continuation of the Helvetian currency's value.

Before the Fed, the zloty remains stable

Before the start of the session in the US, we have been dealing with relatively limited EUR/USD movements. On one hand, the market has been waiting for the FOMC meeting this evening. But, on the other hand the positioning has been in some way aggressive due to the likelihood of a greater surprise on the Fed's statement.

However, in terms of the zloty, the global depreciation of the franc has been causing the CHF/PLN pair to fall to around 3.82. If it were not for political issues in our country, then the Swiss currency would probably currently test levels of 3.75-3.76 against the zloty.

In the early afternoon, the European Commission has published a statement on recent events in Poland. The message from the EC has not, however, triggered any significant changes in the zloty, which may mean that over the next few weeks, the political issues may have a slightly lower impact on the domestic currency than it did last Friday.

 


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