(30 MAY 2018)DAILY MARKET BRIEF 1:A roller coaster ride for the Swiss franc

The FX market continues to be driven by the Italian and Spanish political developments; however, the risk-off sentiment has eased somewhat as investors take a step back to re-evaluate the situation. EUR/USD is up 0.50% this morning as it climbed back towards 1.16 after having reached 1.1510, the lowest level since July 2017. European equities, and more specifically Italian ones, were better bid on Thursday morning with the FTSE MIB rising 0.80%, while the Eurostoxx 600 edged slightly higher by 0.05%. Italian treasuries were also better bid with the 2-year yield easing to 2%, while the 10-year one stabilised around 3%.

Against the backdrop of rising Euroscepticism in the The Swiss franc had a bumpy late European session yesterday as USD/CHF hit 0.9983 before falling 1.33% to 0.9851. The currency pair end up the day around 0.99. EURCHF fell as low 1.1368 before bouncing back to 1.1439. Given the sharp depreciation of the euro of the last few days, a period of consolidation would more than reasonable. Even though investors have taken a more risk-on approach on the FX market, the sentiment on the equity is still mostly negative.

By Arnaud Masset