Monday, 24 September 2012 13:19
ZURICH: Resurfacing worries about state finances in Greece and Spain helped the Swiss franc up against the euro on Monday, though the safe-haven unit later gave up some of those gains.
The franc, on which the Swiss National Bank imposed a ceiling of 1.20 per euro, had been loosing ground against the common currency in recent weeks, given signs market tension due to the debt crisis were easing.
The European Central Bank's decision to buy sovereign bonds of some troubled euro zone members helped ease the stress and boosted the euro, driving it to a four-month peak versus the dollar on Sept. 17.
As part of that trend, the amount of cash commercial banks hold with the Swiss National Bank fell slightly last week, for the first in months.
Yet that impetus has waned, with concerns about Spain and Greece again in focus. Top of investors' minds is the whether and when Spain will seek external aid, a condition for the ECB to start buying its debt.
Later this week, Madrid is expected to present its draft budget plan for 2013 and new structural reforms as well as the results of stress tests on its wobbly banking sector. These could set the stage for a full-scale bailout.
Also, Greece has yet to secure a deal on an austerity package with its international lenders, who left Athens this weekend before they resume talks in a week.
"Consolidation of the cross continues," strategists at Zuercher Kantonalbank (ZKB) said. "The short-term sideways trend remains," with resistance at 1.2198 and support at 1.2070, the ZKB analysts said.
The franc was flat against the euro to trade at 1.2014 by 0726 GMT compared to Friday's New York close.
The franc fell 0.1 percent against the dollar to 0.9336.
Copyright Reuters, 2012