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Forex - EUR/CHF close to record low as debt fears weigh

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Forexpros - The euro tumbled to a record low against the Swiss franc on Tuesday, as fresh concerns over sovereign debt contagion in the euro zone and fears over the outlook for global economic growth boosted safe haven inflows.

EUR/CHF hit 1.0988 during European afternoon trade, the pair's lowest since the inception of the single currency; the pair subsequently consolidated at 1.1058, falling 0.93%.

The pair was likely to find support at 1.0900 and resistance at 1.1203, the days high.

Earlier in the day, the yield on Spanish and Italian government bonds soared to euro lifetime highs, well above 6%, amid fears that a slowdown in global growth could impinge on government efforts to restore financial order in those countries.

A decision by Spanish Prime Minister Jose Luis Rodriquez Zapatero last week to call early elections for November also added to pressure on bond markets.

Meanwhile, the outlook for global economic growth remained downbeat after data on Monday showed that the U.S. Institute for Supply Management's Manufacturing Index fell to its lowest level in two years in July.

Sentiment was also weighed by concerns that the deal to raise the U.S. debt ceiling would not be sufficient to prevent ratings agencies from cutting the U.S. sovereign debt rating.

Later Tuesday, the U.S. Senate was due to hold a final vote on a measure to raise the U.S. debt ceiling by at least USD2.1 trillion and cut federal spending by as much as USD2.4 trillion.

The euro was also lower against the yen, with EUR/JPY shedding 0.14% to hit 109.88.

Also Tuesday, official data showed that Swiss retail sales rose significantly more-than-expected in June, while a separate report showed that Swiss manufacturing activity rose unexpectedly in June.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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