Euro Slides in Worst Week in a Year on Increased Political Risks

  • Trump victory boosts concern over votes in Italy, France
  • Swiss franc strongest since June versus euro on haven demand

Masters: Currency Wars Are Rarely Intentional

The euro had its worst week in a year as Donald Trump’s win in the U.S. presidential race stirred up investor concern over populist outcomes in European votes.

Markets in the euro region potentially have a turbulent period ahead with an Italian constitutional referendum in December and elections in France, Germany and the Netherlands next year that may kick out ruling parties or coalitions and overturn economic policies.

That’s led to a flight to the Swiss franc as a safe haven, causing the currency to rise to the highest versus the euro since June on Friday. The single currency dropped 2.6 percent against the dollar since last Friday.

“The euro is under pressure because of focus on the near-term political events,” said Georgette Boele, a currency strategist at ABN Amro Bank in Amsterdam. “The Trump victory has resulted in concerns that we could see similar outcomes in the elections in Europe.”

The euro weakened 0.4 percent to $1.0855 as of 5 p.m. New York time, the biggest weekly loss since October 2015. The Swiss franc appreciated 0.3 percent to 1.07225 per euro and touched 1.07063, its strongest since June.

A jump by the franc on Wednesday following the U.S. result would have been even higher if it wasn’t for the SNB’s intolerance of franc volatility, according to strategists at Banco Bilbao Vizcaya Argentaria SA and UBS Group AG’s wealth management unit. The SNB could intervene further “if upward pressure on the Swiss franc becomes too large,” Boele said.

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