Forex News – Euro hits record low against Swiss franc

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Forex News: Swiss Franc makes a new record high against EuroThe euro extended its declines against the Swiss franc to hit a fresh historic low as flight to safety pushed investors to the Swiss currency.

The euro fell to a record low of 1.0613 in the North American session as risk aversion was strong in the markets today due to key events from both sides of the Atlantic, which are: the U.S. credit downgrade by Standard and Poor’s and fears of debt contagion in the euro zone.

The euro was weighed down by both concerns, however more so by the fact that the European Central Bank has done little to ease concerns that the debt crisis will not move out of the peripheral zone and into the larger core E.U economies. There is already fear that Italy’s debt will be out of control and spill over to other countries despite Italy pledging to cut debt with new austerity measures and the ECB pledging to buy Italian bonds..

Meanwhile, the U.S. credit downgrade will spur continued market volatility in the short term and keep risk sentiment off and demand for safe havens high. The drawback though of increased demand for the Swiss franc has kept investors on their toes as they have to be cautious that a threat of a Swiss central bank intervention in the markets to weaken the Swissie could still be possible as long as exports are in danger of being harmed by a strong currency.