ZURICH: The Swiss franc pushed higher against the dollar on Tuesday on the back of a pick up in risk appetite after solid US manufacturing data spurred an overnight rally in global equities.
Analysts said despite the retreat in risk aversion, demand was unlikely to fall away for the dollar, seen as the last safe-haven currency following interventions by the Swiss and Japanese central banks to weaken their currencies last year.
"If you look at dollar-Swissie positioning, it's more short the franc than long," said Vontobel head of foreign exchange research Sven Schubert, adding that this showed traders saw more upside than downside for the dollar-franc.
The franc was steady against the euro a day after hitting its highest level for six months, trading in sight of the 1.20 francs per euro cap imposed by the Swiss National Bank on Sept. 6 to prevent the economy from slipping into recession.
"With respect to the euro, data indicate there is no extreme demand for put options on the euro-franc, showing the 1.20 level is not really being tested," Schubert said.
"If the Swiss National Bank does lift the level of the cap, we would expect it in the 1.25-1.30 level, but the fact the SNB is hesitating to do so means they don't see the franc as heavily overvalued for now."
Inflation data due on Thursday will give further clues to the impact the strong franc is having on the Swiss economy.
The franc was 0.2 percent higher against the dollar compared to the New York close, trading at 0.9017 francs to the dollar at 0636 GMT.
The franc was steady against the euro at 1.2040 francs per euro.
Switzerland's federal council could appoint a new central bank chairman and a new board member as early as Wednesday. Thomas Jordan has held the top job at the SNB ad interim since former Chairman Philipp Hildebrand resigned in January after his wife was caught up in a currency trading scandal.
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