After the recent extreme volatility, markets are starting this week with a steadier tone. The Swiss franc, though, has dropped to a two week low against both the dollar and euro. Markets are cautious that the SNB will take further action to weaken the currency with increased speculation over the weekend about a possible peg to the euro. Some improvement in risk appetite and the steadying in markets is also eroding some of the Swiss franc’s safe haven appeal.
The improvement in risk appetite is also weighing on the yen. …

Asian stock markets were higher overnight, buoyed by a rise on Wall Street and yesterday’s better than expected US weekly jobless report. The jump in risk sentiment helped the euro versus the dollar. News that several European governments imposed bans on short-selling, seeking to rein in volatility, may have added support. However, the gains in stocks were mild when looked at in the context of the extreme volatility of the past week and sentiment is likely to remain fragile on concerns about Europe’s debt crisis, as well as the weak …

The yen and the Swiss franc remain the currencies of choice as market sentiment continues to be dominated by fears about the outlook for the global economy and fiscal problems in many developed economies. Although initially providing some support for the euro, the ECB buying of Italian and Spanish bonds has also undermined sentiment as it further intensifies fears that the European debt problems are deep-rooted. Added to this are fears that France could face a downgrade of its triple-A rating which caused its credit-default swaps to widen sharply. The …

Through the euro zone sovereign crisis the euro has found underlying support in its comparatively higher interest rates and the prospect of further tightening from the ECB. Thus, the growing perception (which intensified after yesterday’s ECB press conference that the central bank could be less aggressive in tightening monetary policy than originally anticipated has hit the euro hard. It fell sharply versus the dollar and other majors over yesterday, hitting lows of $1.405 before finding some support there.
The euro has also been hit by the general spike in risk …

The Bank of Japan intervened to curb the yen’s rise overnight, sending the JPY lower against the dollar and euro. The action supported the dollar versus the euro, taking the single currency off overnight highs of $1.436. Meanwhile, with the Swiss franc up 20% versus the dollar year to date and 14% versus the euro, it is no wonder that the Swiss National Bank is also taking steps to halt the risk of its safe haven currency. Yesterday it cut interest rates to almost zero, which saw the CHF retreat …

Concerns about the pace of recovery in the global economy, as well as sovereign associated risks in the US and the euro zone, are overshadowing forex markets with safe haven currencies like the Swiss franc and the yen benefiting as a result. The passing of the US debt deal has done little to ease concerns given that it fails to address longer term problems. Fitch Ratings agency yesterday called the deal “a step in the right direction,” but cautioned that the government still has more work to do to maintain …

A weak round of data from the US and Europe yesterday has hit market sentiment, with July’s disappointing manufacturing ISM and PMI surveys underlining concerns about recovery in the global economy. The news of a debt deal in the US offered some support to the dollar versus the euro as did the spike in risk aversion. However, upside is seen as limited given that there are still many fiscal challenges that the US has to face, including the prospect of a debt downgrade. Meanwhile, speculation that Japan could carry out …