Swiss franc bears rejoiced on Friday when the currency weakened past the psychologically important 1.10 level against the euro – the lowest level since the Swiss National Bank’s shock removal of the minimum exchange rate at the beginning of the year.
But something doesn’t add up. This turbulent summer in global markets should have seen the Swissie soar, not fall, against the euro as it fulfils its traditional role of a safe haven.
Think again. The Swiss Franc has recently defied its decade-long safe haven status.
As Unicredit’s Vasileios Gkionakis pointed out in a note last week ” the franc is increasingly showing signs of decoupling from risk appetite; hence, it is unlikely to benefit in periods of market turbulence like the recent one (…) This is because an important mechanism by which CHF appreciates during risk-off episodes – Swiss residents reversing foreign portfolio investment flows – is no longer in place”, adding that there is still a “measurable overvaluation gap.”
via CNBC 
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