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As global financial markets seem set to rally in a reflex "risk on" reaction to the bailout of Spain's banks, one small corner of the financial universe remains notably somber: the euro/Swiss franc currency pair (EUR/CHF). If the Spanish bank bailout was indeed a critical step toward solving Europe's sovereign debt crisis, I think I have cause for skepticism after watching the reaction to trading in the euro (NYSEARCA:FXE) versus the Swiss franc (NYSEARCA:FXF).

Whether daily…

(click to enlarge)EUR/CHF continues to hug the Swiss National Bank

EUR/CHF continues to hug the Swiss National Bank's 1.20 floor

…or hourly…

(click to enlarge)EUR/CHF bounces around afer trading starts post-Spanish bailout but the volatility is well within current tight ranges

EUR/CHF bounces around after trading starts post-Spanish bailout but the volatility is well within current tight ranges

Source: FreeStockCharts.com

…the Swiss franc continues to act as a fat, heavy weight pressing EUR/CHF almost as low as it is allowed to go (the 1.20 floor established by the Swiss National Bank).

I am expecting the franc to weaken against the euro the moment the market is convinced the eurozone crisis is on its way to resolution. If nothing else, the Swiss National Bank (SNB) could jump into the market to declare an even higher floor against the euro and act resolutely confident that the worst of the euro's days are finally in the rearview mirror. So I consider the non-reaction in EUR/CHF to speak much louder than all today's rallies combined. As this latest summer of discontent unfolds, I expect stocks to tell frequent lies. I expect the currency markets to tell frequent stories worth heeding. This eurozone crisis is likely not over until the fat franc flies and lifts EUR/CHF higher.

Be careful out there!

Disclosure: I am long FXF.

Additional disclosure: In forex, I am long EUR/CHF, short EUR/GBP, short EUR/JPY