AMSTERDAM (Reuters) – The Swiss franc fell to its lowest level in nearly seven months against the euro on Monday, with the Brexit trade deal in focus, while the dollar fell after U.S. President Donald Trump , signed a COVID-19 aid project, preventing a government from shutting down.
The Swiss franc fell 0.3% to 1.08860 against the euro, its biggest drop since 8 June. It remained unchanged against the US dollar at 88.835 cents at 0903 GMT.
“What we’re seeing is a continuation of Brexit hard risk pricing,” said Ulrich Leuchtmann, head of FX research at Commerzbank in Frankfurt.
“I think that many market participants saw the Swiss as an alternative to the euro, (which) would have been more affected by a strong Brexit,” he said. Investors are likely to close these positions in the next sessions, he added.
The euro rose 0.1%, $ 1.22370, close to the $ 1.2273 2 1/2 year high, touched this month.
In the United States, Trump signed a $ 2.3 trillion aid and pandemic spending package law, avoiding a partial federal government shutdown that would have started on Tuesday.
The dollar fell 0.3% against a basket of currencies to 90.031, the smallest drop in a week.
The increase in risk appetite also hurt safe-haven government bonds, with 10-year US Treasury yields rising 2 basis points by 0.95%. Germany’s benchmark yield over 10 years remained unchanged at -0.55%.
Meanwhile, the pound rose 0.1% against the US dollar to $ 1.3551, continuing to keep in mind the $ 1.3625 mark it hit earlier this month for the first time since May 2018.
It approached that level on Thursday, when Britain and the EU announced the trade agreement.
The pound fell 0.5% against the euro, to 90.280 pence.
“Markets are expected to wait until the next week before buying (GBP) again, for fear of massive bottlenecks in the English Channel when the new rules come into force,” Jeffrey Haley, senior market analyst at OANDA, told customers.
Although the deal was a relief to investors, the basic nature of the pact leaves Britain much more detached from the EU, analysts say, suggesting that any subsequent gains will be modest and the discount that has affected UK assets since 2016 it will not disappear soon.
Brussels has not yet decided whether to grant Britain access to the bloc’s financial market.
Mitsuo Imaizumi, chief foreign exchange strategist at Daiwa Securities in Tokyo, expects the pound and euro to fall against the dollar, reaching $ 1.30 and $ 1.15, respectively, in late summer.
The Australian dollar, a trade-sensitive currency, advanced to 76,110 US cents, up from the 2 1/2 year high of 76.390 this month.
Yields on 10-year southern European bonds – considered more risky due to their lower credit ratings – fell 2-3 basis points.
The yuan rose after China’s central bank raised its official guidance level to the highest in 30 months, reaching 6.5280 against the dollar in the onshore market, but remained unchanged at 6.5408.
The last 0.3% drop in the offshore market was 6.5311.
The yen rose slightly against the dollar, up 0.1% to 103.455. .
Policymakers in central Japan are divided over how far they should go in examining control of the interest curve, with some calling for a comprehensive review of the structure, a summary of the views expressed in the December rate review, shown on Monday .
Reporting by Yoruk Bahceli; additional reporting by Kevin Buckland in Tokyo; Andrew Heavens edition