ZURICH: The Swiss franc was steady against the euro and the dollar on Wednesday as risk appetite remained volatile ahead of fourth quarter earnings results and as US budgetary concerns remained in focus.
Some market participants said the prolonged uncertainty was keeping a lid on equities while supporting safe haven assets such as the US dollar. The franc has been capped at 1.20 against the euro, seen as a higher risk asset while the euro zone crisis persists.
"Equity sentiment overall continues to sour as fiscal cliff euphoria faded further and markets brace for the reality of likely protracted negotiations to raise the debt ceiling and avert huge spending cuts," Mitul Kotecha, Credit Agricole head of foreign exchange strategy, said in a note.
"Caution over a plethora of fourth quarter earnings reports over coming weeks is limiting upside for risk assets."
But Anatole Kaletsky, founding partner of investment adviser Gavekal, said at an investor day held by Geneva-based asset manager Notz Stucki that investors saw the budget disputes between US lawmakers as little more than sabre-rattling.
"Markets are assuming resolutions will be found. They are ignoring this high-tension game of chicken," he said.
In morning trading, the franc was steady against the dollar compared to the new York close, trading at 0.9236 per dollar at 0721 GMT.
The franc has continued to trade in tandem with the single currency since the Swiss National Bank set the 1.20 per euro cap in September 2011 to stave off a recession and deflation. It was unchanged at 1.2086 per euro early Wednesday, with traders seeing little chance of a shift in policy any time soon.
"At times of a deteriorating labour market, a softening in the SNB's minimum exchange rate of 1.20 in EURCHF is unlikely to materialise," UBS economist Reto Huenerwadel said in a note.
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