Swiss Franc (CHF) Exchange Rate Strengthens on Positive Data and Safe Haven Demand
The Swiss Franc (CHF) exchange rate made gains against several major peers and strengthened against perceived riskier assets on Tuesday due to renewed clashes between China and Vietnam, while the violence in Ukraine also bolstered demand for safe haven currencies.
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The Franc found support early in the session from official data which showed that Switzerland’s trade balance rose more-than-expected in April.
According to the report released by the Federal Statistics Office, the Swiss trade balance increased to a seasonally adjusted figure of 2.425 billion, up from the previous reading of 1.996 billion.
Economists had been expecting the Swiss trade balance to rise to 2.052 billion last month.
Demand for safe havens edged higher after it was reported that Ukrainian forces launched an assault on Donetsk airport.
According to reports, at least 30 pro-Russian separatists have been killed in the fighting.
Concerns that Ukraine could slide into a full scale civil war increased over the weekend after the nation’s newly elected president Petro Poroshenko vowed to not allow the east of the country to be ‘turned into Somalia’.
Tensions in the South China Sea also escalated today after a Vietnamese fishing vessel sank after it collided with a Chinese vessel in hotly disputed waters.
According to Vietnam’s coast guard the boat was encircled by up to 40 Chinese vessels before being rammed.
Against the Euro, the Swiss Franc was firmer after European Central Bank president Mario Draghi warned that the bank was seeing signs of deflation in the Eurozone.
The single currency was also softened by election victories for Eurosceptic parties in the UK, France and Greece.
The Swiss Franc is currently trading against the Euro in the region of 0.8189 and trading against the US Dollar in the region of 1.1181.