Investing.com – Political and monetary decisions have caused volatility in various currencies, including the Japanese yen and the Japanese yen. While the French elections weakened the euro and strengthened the Swiss franc, Japanese monetary policy negatively affects the yen. That's the assessment of Julius Baer, which issued a note to clients and the market on Tuesday.
The weakness of the euro and the strengthening of the Swiss franc may have diminishing effects, according to the Swiss group, “since the franc is still well balanced and the impact of the elections may be less significant than feared.” Despite its impact on the euro, David Mayer, economist at Julius Baer, sees limited effects on the currency.
“The euro had already started to weaken earlier this month when the ECB began easing policy. However, policy has extended this weakness, with levels around 0.95 showing evidence that the franc is significantly overvalued again,” he estimates. EUR/CHF at 0.97.
As for the Japanese currency, the change in the Bank of Japan's ultra-loose policy is expected to continue to weigh on the yen, believes Julius Baer. “The Japanese yen continued to weaken after the BOJ’s July meeting, which kept its policy stance unchanged, with further information on tapering bond purchases postponed to the next meeting,” he recalls, taking into account that the normalization of BOJ policy Central Japan. Monetary policy is too slow. Julius Baer estimates it at 160 over the forecast horizon of 3 to 12 months.
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