ZURICH: The Swiss franc fell against the dollar and the euro on Thursday as dour economic data in the euro zone dampened sentiment for the single-currency.
The franc fell to a four-month low past 1.25 against the euro on Wednesday hurt by recent benign Swiss inflation and waning safe-haven inflows before later paring losses.
On Thursday, it slipped 0.2 percent against the single currency compared to the New York close to trade at 1.2458 by 0726 GMT.
Data on Wednesday showing the euro zone contracted for the sixth quarter in a row pressured the single currency, in turn pulling the franc down against the dollar.
"The GDP situation yesterday showed how weak the situation is in Europe. The US is in better condition," said Sarasin analyst Alessandro Bee.
The Swiss franc has largely tracked the euro since the Swiss National Bank (SNB) imposed a 1.20 per euro cap on the franc in September 2011 after a strong run up in the Swiss currency threatened to tip the country into recession.
Although the franc has weakened since the start of May due to waning safe-haven flows as investors worried less about the euro zone crisis, SNB board member Fritz Zurbruegg said the franc was still overvalued, justifying the cap.
"The minimum rate will remain in force as long as it is necessary for the execution of our mandate: the maintenance of price stability while taking account of the development of the economy," Zurbruegg told L'Hebdo weekly.
The franc fell 0.4 percent against the dollar to trade at 0.9685 by 0725 GMT compared to the New York close.
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