The Swiss franc remains weak against the US dollar as well as euro today as safe haven demand for the Swissie eased on hopes that European leaders are working hard towards a plan to contain the euro zone’s debt crisis.
At the EU summit on Sunday in Brussels, European leaders outlined a framework for recapitalising the region’s banks. In order to cope with likely losses on Greek and other euro zone sovereign bonds, the banks will need to be injected with between 100 and 110 billion euros.
The sticky subject of haircut on bond holders will have to be ironed out between Germany and France by next week. Differing views between the two countries exist over the size of losses private holders of Greek government bonds will have to accept.
But some sort of an agreement is expected to be reached by the second summit on Wednesday.
USDCHF bounced off an early European session low of 0.8804 to hit a session high of 0.8874. EURCHF is trading well above the 1.20 floor hitting a high of 1.2306 so far today.
Back on September 6, the Swiss National Bank set a floor of 1.20 francs against the euro so as to curb the Swiss currency strength in order to help Swiss exporters. Since then, the euro has remained above that floor despite alot of volatility in the single currency recently due to concerns over the euro zone debt crisis.
The Swiss franc is usually in demand as a safe haven currency in times of uncertainty in the markets.