The Chairman of the Swiss National Bank, Thomas Jordan, has taken to the wires to confirm that the central bank has engaged in buying foreign currency this morning. The Swiss franc has briefly caught a short flight to safety in the aftermath of the Greek calamity mainly hitting equity markets this morning.
In the meantime, the single European currency has recovered to above 1.1120 against the U.S. dollar and is currently trading merely 0.5 percent lower than Friday’s close. The move is a testament to the fact that an unfavorable Greek scenario has largely been priced into the forex market.
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Brokers have been reporting no material impact from the overnight slump in the euro and in major European indices. Our call that the euro is likely to recover its losses quickly is becoming a reality in early London trading and no additional stress is engulfing the markets. We are far from a Lehman or an SNB class event this Monday morning.