ZURICH: The Swiss franc eased to its lowest since mid-August against the dollar on Tuesday as fresh signs of a pickup in global manufacturing lifted investor appetite for risk, weighing on safe-haven currencies like the franc and the yen.
Official data showed China's services sector grew steadily in August as domestic demand picked up, adding to signs the world's second-largest economy is pulling out of a slowdown, while the Swiss economy expanded by a better than expected 0.5 percent in the second quarter as private consumption improved and spending on machinery rose.
In June, the Swiss National Bank, which holds a policy meeting in two weeks, reaffirmed a forecast for growth of 1 to 1.5 percent this year.
The franc was slightly weaker against the euro after Swiss National Bank vice-chairman Jean-Pierre Danthine told a gathering of business leaders the SNB sees no end to the franc cap as long as the conditions justifying it persist.
"The cap on the franc won't stay in place forever, but at the moment we don't see the end of it," Danthine said, adding central banks had to tread very carefully when hinting at exit strategies.
The SNB capped the Swiss franc at 1.20 per euro two years ago after safe-haven buyers seeking refuge from the euro zone crisis bid the currency almost to parity with the euro, threatening the Alpine country's export-oriented economy.
Analysts at Credit Agricole noted the growth in the SNB's foreign exchange reserves had slowed, indicating the central bank had had to intervene less in foreign exchange markets in recent weeks to defend the cap.
"Foreign liabilities drop, i.e. demand for Swiss franc assets weakens, implies downside risks for the franc," they added.
The franc fell 0.2 percent against the dollar compared to the New York close to trade at 0.9359 per dollar by 0712 GMT.
The franc fell 0.1 percent against the euro to 1.2336 per euro.
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