Investing.com – Political and monetary decisions have led to volatility in various currencies, including the , , and the Japanese yen. While the French elections weakened the euro and strengthened the Swiss franc, Japanese monetary policy is weighing on the yen. This is the assessment of Julius Baer, who published a message to clients and the market on Tuesday.
The Swiss group said the weakening euro and strengthening Swiss franc could have a diminishing effect “as the franc remains well balanced and the impact of the elections may be less significant than feared.” Although this has had an impact on the euro, David Meyer, an economist at Julius Baer, believes the impact on the currency will be limited.
“The euro had already started to weaken earlier this month when the European Central Bank launched easing policies. However, this policy has exacerbated this weakness: levels around 0.95 suggest that the franc is again significantly overvalued,” he explains, estimating EUR/CHF at 0.97.
As for the Japanese currency, it is expected that changes in the ultra-loose policy of the Bank of Japan will continue to influence the yen, believes Julius Baer. “The Japanese yen continued to weaken after the July meeting of the Bank of Japan, which maintained an unchanged policy stance, and further information on the gradual reduction of bond purchases was postponed until the next meeting,” he reminds, given that the normalization of the Bank of Japan monetary policy has been very slow. Julius Baer estimates the number will be 160 over a forecast horizon of 3 to 12 months.
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