ZURICH: The Swiss franc weakened a touch against the euro and was little moved against the greenback, with risk aversion taking a back seat on Tuesday on hopes the euro zone may boost its support for debt-stricken members.
The euro crawled up from eight-month lows on Tuesday as a report that Europe is considering beefing up its bailout fund prompted short-covering, and it could extend its rebound in the very near term given traders' overwhelmingly short positions in the currency.
But the euro remained vulnerable to persistent doubts over policymakers' ability to craft a plan quickly to deal with the crisis. There has also been speculation the European Central Bank could ease policy at its next meeting.
"Risk appetite stabilised somewhat amid speculation about policy measures to contain the euro zone crisis," economists at Credit Agricole said in a note. "ECB speakers continue to hint at policy accommodation in October, at least on the liquidity front, while the case for a rate cut has strengthened."
Until the Swiss National Bank instituted a cap on the franc at 1.20 per euro on Sept. 6, the 'Swissie' was a big beneficiary of safe-haven flows out of the euro zone, and it nearly touched parity with the common currency in early August.
The record-strong franc risked tipping Switzerland into a recession and exacerbated downside price pressures, the SNB has said.
In a sign that Swiss economic momentum is set to slow, the UBS consumption indicator posted its biggest monthly fall in nine years in August, with the strong currency dampening consumers' willingness to spend.
The franc fell 0.1 percent against the euro, trading at 1.2214 francs per euro by 0606 GMT compared to the New York close. The franc was flat against the dollar.
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