Investing.com – Political and monetary decisions have caused volatility in several currencies, including the , , and the Japanese yen. While the French elections weakened the euro and strengthened the Swiss franc, Japanese monetary policy is negatively impacting the yen. This is the assessment of Julius Baer, who released a note to customers and the market on Tuesday.
The weakening of the euro and the strengthening of the Swiss franc could have diminishing effects, according to the Swiss group, “as the franc remains in balance and the impact of the elections may be less than feared.” Despite influencing the euro, David Meier, economist at Julius Baer, sees limited impact on the currency.
“The euro had already started to weaken earlier this month when the European Central Bank started its easing policy. However, policy extended this weakness, with levels around 0.95 indicating that the franc is again significantly overvalued,” he explains, estimating EUR/CHF at 0.97.
For the Japanese currency, Julius Baer expects the change in the Bank of Japan’s ultra-loose policy to continue to impact the yen. “The Japanese yen continued to weaken after the July meeting of the Bank of Japan, which maintained an unchanged policy position, with more information on the gradual tapering of bond purchases postponed until the next meeting,” he recalls, given that that the normalization of interest rates from the BoJ Monetary policy is very slow. Julius Baer estimates the number at 160 over the forecast horizon of 3 to 12 months.
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