The euro has gapped lower against the Franc, only to see a big turnaround after the initial shock.
EUR/CHF
From Daily Forex, this is Christopher Lewis, taking a look at the Euro against the Swiss franc. There is a reason why I'm bringing this pair up. You can see that we gapped lower and then turned around to show strength. At this point in time, I think it ends up being a question. And with that being said, I think you have to pay close attention to how this pair behaves because it's a really good measure of risk appetite and at risk sentiment.
It also is backed by the Swiss National Bank who will not hesitate to intervene if things get a little too hot for the Swiss franc as we have seen multiple times in the past in this, the euro is the currency they watch the most. That being said, and I don't know that there was any intervention today. You typically don't know this until after the fact. Europe has a major problem in the form of Qatar.
Qatar stopping production of natural gas means Europeans will be paying much higher prices for natural gas as it will probably be coming from the United States, transported across the Atlantic, and that's a whole other process that is much more expensive and therefore will do quite a bit of damage to the European economy.
Risk Appetite and Swiss Intervention in Focus
Even if that's not what's driving this pair, quite frankly, there's no way to truly know that. You have to look at this through the perspective of the Swiss as well. They will get involved if this thing drops too far. We dropped all the way down to 0.9020 or so, and I've turned around to recapture the 0.91 level. It's also worth noting that a lot of the markets out there seem to be showing signs of life.
In other words, what I mean by that is some of the indices out there are doing fairly well after initially gapping much lower. That tells me that financial markets are not that concerned about the Iranian situation yet, and that could provide a little bit of upward momentum for this pair. While I'm a little hesitant to go long of this pair, I'm definitely hesitant to short it. So, watch this market. This is not even necessarily one that you need to trade.
But it gives you an idea of how risk appetite is going. If it starts rising, that means traders are willing to take risks, and then maybe you can translate that into another reason to buy the NASDAQ 100, for example. You can get long at this pair. There is an interest rate differential that favors Europe, but I think this is going to be very noisy. If I wanted to short the Swiss franc, I'd probably do it with something with a little bit more power behind it than the euro.