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Euro to Swiss Franc (EUR/CHF) Exchange Rate Forecast to Advance despite Positive Swiss Retail Sales

The Euro to Swiss Franc (EUR/CHF) exchange rate rallied by around 0.71% on Monday afternoon.

Despite the fact that European economic data produced positive results on Monday, the single currency slumped versus most of its peers. The depreciation can be connected to pessimism regarding Greece’s future as a member of the Eurozone.

The Swiss Franc, meanwhile, dived versus nearly all of its currency rivals despite a significant improvement in retail sales. The declination is the result of speculation that the Swiss National Bank (SNB) will intervene in the market if interest rate spreads between the Euro and Franc continue to decrease. The difficulty is, with a cash rate of -0.75% there isn’t much room for the SNB to manoeuvre.

The Euro to Swiss Franc (EUR/CHF) exchange rate is currently trending in the region of 1.0525.

Euro (EUR) Exchange Rate Forecast to Strengthen against the ‘Swissie’ (CHF) Despite Increasing Grexit Potential

European economic data printed positively on Monday, but the result had minimal impact on the single currency. Both the Eurozone’s seasonally adjusted and non seasonally adjusted Trade Balance and figures bettered forecasts.

The reason that the positive result didn’t initiate a Euro uptrend is due to ongoing difficulties in the Hellenic nation. With time running out before Greece can no longer secure bailout funds and with large debt repayments due to the International Monetary Fund (IMF) very soon, many analysts feel that Greece will eventually leave the Eurozone.

Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington stated; ‘It is increasingly clear that Prime Minister Alexis Tsipras is not a leader that the Euro area can ‘do business with’ and hence there are no longer any political gains for the Euro area in trying to coax him towards the political centre.’

‘One can only read political motives in the creditors’ insistence on new cuts to pensions after five years of plundering them under the memorandum,’ Tsipras said in a statement to Efimerida Ton Syntakton newspaper on Monday. ‘We will wait patiently for the institutions to move toward realism.’

The Euro to Swiss Franc (EUR/CHF) exchange rate dropped to a low of 1.0428 today.

Swiss Franc (CHF) Exchange Rate Forecast to Dive versus the Single Currency as Switzerland Faces Recession

Swiss economic data printed relatively positively on Monday but the Franc declined. Although Producer and Import Prices declined by more than forecast on both an annual and monthly basis, April’s Retail Sales saw an annual gain of 1.6%; bettering the previous figure of -2.4%.

The Swiss Franc declination is the result of Switzerland facing a recession and the central bank having fewer options for intervention.  ‘A further reduction of the deposit rate would most likely lead to higher demand for cash that the SNB would like to avoid,’ said Karsten Junius, chief economist at Bank J Safra Sarasin Ltd. in Zurich. ‘The SNB has reached its effective lower bound.’

‘At minus 0.75 percent we’ve already gone quite far and we’re waiting to assess the effect,’ SNB Governor Jordan told Schweiz am Sonntag last month. ‘Whether we need to go lower with the negative rates depends on international developments.’

However, some analysts still predict SNB intervention further down the line. ‘Another 25 basis point rate cut is possible somewhere in the third quarter of 2015 if interest rate spreads between Euro and Franc markets continue to decrease, which put upwards pressure on the Franc,’ said Julien Manceaux at ING in Brussels. ‘In this case, the lower bound would probably be at minus 1.25%.’

Euro to Swiss Franc (EUR/CHF) Exchange Rate Forecast to Hold Gains despite Grexit Fears

With an absence of domestic data to initiate changes, the Euro to Swiss Franc (EUR/CHF) exchange rate is likely to hold gains for the remainder of Monday’s European session. Tuesday could see heightened EUR/CHF volatility with the German ZEW Economic Sentiment Survey due for publication. However, the situation in the Hellenic nation is likely to dominate trader focus as we draw ever closer to key deadlines.

The Euro to Swiss Franc (EUR/CHF) exchange rate climbed to a high of 1.0532 today.