ZURICH: The Swiss franc ticked up against the greenback, with investors focused on a European Central Bank (ECB) meeting later on Thursday for comments or policy steps that could whet or further diminish risk appetite.
Since the Swiss National Bank set a cap of 1.20 per euro on the franc last September, it has traded largely in tandem with the common currency. As the euro has come under pressure due to the European debt crisis, the franc has followed it lower against the dollar, falling to a 19-month trough in July.
"Warnings by the Bundesbank President Weidmann for the ECB not to overstep its remit sets the scene for a stressful policy meeting today," said Mitul Kotecha, head of forex strategy at Credit Agricole Corporate and Investment Bank.
Bundesbank chief Jens Weidmann took the helm of the German central bank last year after his predecessor, Axel Weber, quit in protest at the ECB's bond purchase programme. Now he is under pressure to drop his resistance to a more interventionist ECB role that may involve buying government bonds after ECB President Mario Draghi pledged last week to "to do whatever it takes to preserve the euro".
"Although markets have pared back their overly bullish expectations from the end of last week a lack of action by the ECB to reduce peripheral bond yields will disappoint and lead to a sell off in risk assets," Kotecha said.
The cap on the franc was set to prevent Switzerland from tipping into a recession. Yet so far, growth has proved relatively robust.
Retail sales data for June is due at 0715 GMT, while PMI manufacturing data is due at 0730 GMT.
US and euro zone factory activity slumped again in July while Chinese manufacturing hit an eight-month low, surveys showed on Wednesday, as economies worldwide showed signs of slowing. According to a Reuters poll, the Swiss PMI print is expected to show a similar trend, with economists forecast a dip to 47 points for July.
The franc rose 0.2 percent against the dollar to trade at 0.9809 by 0554 GMT compared to the New York close.
The franc was rangebound against the euro at 1.2016.
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