Some of the clouds over Europe’s political landscape have disappeared after the French presidential election resulted in a market-friendly outcome. So has the Swiss franc now lost its value as a Eurozone malaise hedge, or are there other reasons to hold the currency?
The Chinese yuan (CNY) appears to have been stable over the last couple of months, giving the impression that capital outflows have stabilised. But while the Chinese dragon seems to be asleep, there is more going on than meets the eye. The side effects of government intervention are increasingly apparent in the Hong Kong dollar (HKD) market, which offers an interesting way for investors to seek to protect against the risk of another round of market stress stemming from potential CNY depreciation.
With global monetary policy tightening, what will smaller central banks do now? Most didn't have a choice but to keep rates low to avoid excessive currency appreciation, and some had to resort to quantitative easing (like Sweden) or currency floors (like Switzerland and the Czech Republic). The Swiss floor gave in under pressure in early 2015, so the big question is now whether the Czech Republic might also depart from its currency floor?