Swiss franc flat on euro zone debt uncertainty

ZURICH: The Swiss franc was treading water against the euro on Friday as uncertainty about the euro zone's debt problems kept market participants from taking big positions.

By 0705 GMT the franc was flat against the euro, trading at 1.2197, after the European Central Bank rejected any form of debt restructuring for Greece, which is favoured by Germany.

This uncertainty offset any support for the common currency from a likely interest rate rise by the ECB next month, because a July hike had already largely been priced in.

Without a big change in risk appetite the Swiss franc appeared to be stuck in a 1.21/1.2300 range against the euro, one trader said.

"Another failed attempt in euro/Swiss to break the key 1.2318 level seems to reinforce the downtrend in the cross technically speaking," UBS economist Reto Huenerwadel said.

Record US exports in April offered a glimmer of hope the slowdown in the US economy may be ending.

This was tempered, however, by a report showing first-time claims for jobless benefits edged higher last week.

The franc was down against the dollar, trading at 0.8425.

"Key support (for dollar/Swiss) is the 0.8328 recent low and while above here we would allow for recovery very near term to the 0.8554 May low," Technical analysts at Commerzbank said in a note.

Copyright Reuters, 2011