Risk aversion drove the safe-haven Swiss franc to a record high against the Dollar today. The Swiss also soared the Euro as talks in U.S. Congress over the debt ceiling reach a deadlock, sapping appetite for risky assets.
As the August 2nd deadline looms, Republicans and Democrats in the U.S. Congress are racing to agree on a deal to avert a default, investors sought refuge in the safe-haven franc, which has shot to one record high after another this year.
The Dollar plummeted over 65 pips so far since the European session open of 0.8122 and currently trading at 0.8058 at 07:30 GMT.
Meanwhile the Euro dropped almost 120 pips since the European session open, falling from 1.1671 to 1.1554. The Single currency managed to clawed back ground against the franc at the end of last week after European leaders agreed a rescue package to help debt-stricken Greece but t hen began to drop late Friday as positive sentiment waned and also the US debt issue exacerbated Euro’s fall.
Marcus Hettinger, head of global forex research at Credit Suisse said the euro could remain under pressure in the near term.
Meanwhile, investors will focus on the Swiss KOF economic barometer on Thursday for indications of whether the Swiss franc’s continued strength is hurting Switzerland’s growth. A strong Swiss currency is devastating for Swiss exports. Growth is expected to slow this year to around 2 percent as the strong Swiss franc hits exporters, the Swiss National Bank said at its monetary policy review last month.
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