Despite decreasing volatility and the announced relief fund, Swiss Life Asset Managers is not very optimistic about the Eurozone. Economic forecasts are not pointing to a sustainable recovery.

With volatility having steadily declined since its peak in mid-March, the market started to move in the second half of May. The EUR surged in the wake of the announced Merkel-Macron plan. EUR/CHF also recovered, which should suit the SNB with its concerns about a slide in the exchange rate.

However, Swiss Life Asset Managers remains sceptical and expects the EUR to depreciate against USD and CHF in June. It considers the proposed EU relief fund to be facing numerous hurdles and anticipates increasing discord among EU members. Economic forecasts for the Eurozone are also more muted than for Switzerland and the US.

Alongside France, the UK is the second straggler in Europe. A prolonged epidemic, later lockdown and tough Brexit talks with the EU are fuelling uncertainty. Swiss Life Asset Managers expects the GBP to depreciate against the USD.

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