The Swiss National Bank (SNB) shocked the Markets last night with a surprise move by removing the peg attaching the Swiss Franc to the Euro. The Swiss Franc instantly soared against all currency pairings. The AUD/CHF Exchange Rate had a 15% movement falling from a high of 0.8408 to an overnight low of 0.5634.
During 2011 the SNB decided that the CHF was overvalued as investors bought into the safe haven currency and exponentially increased its value, as a result the Swiss National Bank announced a cap in the Exchange rate between the Euro and the Swiss Franc, pegging it at 1.2 to the franc. The statement by the SNB at the time of introduction was that it was introduced as a plan which ‘protected the Swiss economy from serious harm.’ The peg has been in place since 2011 until last night.
The Swiss National Bank explained that they were concerned about weakness in the Euro-Zone impacting the Swiss economy, stating ‘The Euro has depreciated considerably against the US dollar and this, in turn, has caused the Swiss Franc to weaken against the US dollar. In these circumstances, the SNB concluded that enforcing and maintaining the minimum exchange rate for the Swiss Franc against the Euro is no longer justified.’
The CHF/EUR exchange rate moved by almost 30% after the news shocked the market moving from a rate of 0.8323 to a high of 1.04425.
The Australian Dollar along with all other currencies had a significant sell-off against the Franc overnight however has made some ground back after the initial hype. The AUD/CHF Exchange rate is currently trading at 0.7065 at 9:00 AM AEST Today.
The Australian Dollar (AUD) Rallies against Majors as Unemployment rate falls to 6.1%
The Australian Dollar has experienced a highly volatile week against all the majors. Since the beginning of 2015 the ‘Aussie’ has been making minor gains against all the majors from the record lows seen in the final months of 2014.
After the huge losses seen in the AUD Exchange rate earlier this week due to fresh lows in the commodities pricing of copper, the AUD Exchange Rate rallied yesterday locally with the release of Australia’s unemployment rate.
The release was an improvement for the economy with a result of 6.1% up from 6.3% and an impressive 41.6k of full time jobs added to the economy. A positive indicator for the Australian economy and the Australian Dollar.