At the start of the week, the Swiss Franc fell by over 1% against the US Dollar and fell broadly against the Pound as support garnered from concerns over the situation in Greece faltered after a conditional loan extension for the debt-ridden nation was approved last week.
The Franc then briefly found support as a deadline for the Syriza led Greek government to provide a list of planned reforms passed. The failure to deliver the list to its lenders on time caused investors to fret. Concerns were eased however as the list arrived early on Tuesday morning and was widely met with approval.
‘The move in the Swiss Franc was broadly in line with the overall pick up in risk appetite. Clearly, they want to keep Greece in the Eurozone and as a consequence some of the safe-haven plays are being unwound,’ said a currency strategist.
The list of reforms sent by Greece was then officially accepted by the European Commission, a move that further eased investor concerns.
‘This list is sufficiently comprehensive to be a valid starting point for a successful conclusion of the review as called for by the Eurogroup at its last meeting. We are encouraged by the commitment to combat tax evasion and corruption,’ the Commission said in a letter released in Brussels.
The Swiss Franc then rallied against the Pound and other major peers as market attention shifted to a speech delivered by Federal Reserve Chairperson Janet Yellen to the US Congress. The Fed is under attack from both sides of the Congress with the left accusing the central bank of being too cosy with the banks it oversees and by the right for its aggressive monetary policy.
Economists are jittery ahead of the speech and as such, the Swiss Franc received support and managed to claw back some of the losses received in Monday’s session. If, Yellen delivers a dovish speech, then the US Dollar will weaken. If she offers an optimistic outlook, then investors will raise their bets for an interest rate hike occurring soon, such an outcome will likely lead to the US Dollar rising against the Franc.
The Franc is likely to strengthen as economists forecast that domestic data released later in the week will come in positively. Industrial production is expected to rise by 1.86%, reversing the previous month’s decline of 0.36%.