AMSTERDAM (Reuters) – The Swiss franc fell to its nearly seven-month low against the euro on Monday as Brexit trade deal remained in focus as the dollar fell after US President Donald Trump passed a COVID-19 support bill signed a government shutdown.
The Swiss franc fell 0.3% to 1.08860 against the euro, its lowest level since June 8. It was unchanged against the US dollar at 88.835 cents at 0903 GMT.
“What we’re seeing is a continuation of pricing because of the hard Brexit risk,” said Ulrich Leuchtmann, head of FX research at Commerzbank in Frankfurt.
“I think many market participants saw Swissie as an alternative to the euro, (which) would have been hit harder by a hard Brexit,” he said. Investors would likely close such positions in the following sessions, he added.
The euro rose 0.1% at $ 1.22370, near its 2 1/2 year high of $ 1.2273 touched this month.
In the United States, Trump has signed a $ 2.3 trillion pandemic relief and spending package, preventing a partial federal government shutdown that would have begun Tuesday.
The dollar fell 0.3% against a basket of currencies to 90,031, its lowest level in a week.
The increase in risk appetite also detracted from safe-haven government bonds, with a 10-year yield on US Treasuries by 2 basis points to 0.95%. The German 10-year yield benchmark remained unchanged at -0.55%.
Meanwhile, the British pound added 0.1% against the US dollar to $ 1.3551, keeping an eye on the $ 1.3625 milestone it hit earlier this month for the first time since May 2018.
It reached that level on Thursday, when Britain and the EU announced the trade deal.
The pound fell 0.5% against the euro at 90,280 pence.
“Markets will probably wait until next week to buy (sterling) again, fearful of huge bottlenecks in the English Channel as the new rules come into effect,” Jeffrey Haley, senior market analyst at OANDA told clients.
While the deal was a relief to investors, the bare nature of the pact leaves Britain much more detached from the EU, analysts say, suggesting that any subsequent gains will be modest and that the rebate has plagued British assets since 2016. will not disappear. soon.
Brussels has not yet made a decision on whether or not Britain will grant the bloc’s financial market.
Mitsuo Imaizumi, chief FX strategist at Daiwa Securities in Tokyo, expects the pound and euro to fall $ 1.30 and $ 1.15 respectively against the dollar by the end of the summer.
The Australian dollar, a trade-sensitive currency, rose to 76,110 cents, towards the 2 1/2 year high of 76,390 reached this month.
Yields on 10-year Southern European bonds – which were considered more risky due to their lower credit ratings – fell 2-3 basis points.
The yuan crept up after the Chinese central bank lifted its official target level to its highest level in 30 months of 6.5280 against the dollar in the onshore market, but last remained unchanged at 6.5408.
It was last 0.3% lower in the offshore market to 6.5311.
The yen rose slightly against the dollar, up 0.1% at 103,455. .
Policymakers at Japan’s power plant were divided on how far to go in examining yield curve control, and some called for a comprehensive overhaul of the framework, a summary of views expressed during the December interest rates were voiced.
Reporting by Yoruk Bahceli; additional reporting by Kevin Buckland in Tokyo; Editing by Andrew Heavens