ZURICH: The Swiss franc slipped against the euro on Wednesday as the single currency rose to a four-month peak against the dollar on optimism that a German court will approve the legality of the euro zone's bailout fund later in the day.
The franc had traded largely in tandem with the single currency after the Swiss National Bank capped it a year ago at 1.20 per euro to stave off the threat of deflation and recession after safe-haven buying pushed it sharply higher.
But it fell to an eight-month low against the euro last Friday, as investors cheered a European Central Bank bond-buying plan and after economic data showed the Swiss economy performing less well than expected.
The dollar hit a four-month low against a basket of currencies on Wednesday, hurt by expectations of more US monetary easing and a warning from Moody's the previous day that it could cut the credit rating of the United States.
"Buoyant mood should continue ahead of the German court decision," said Kintai Cheung of Credit Agricole. "However given a lot of positive news has been priced in, sentiment could swing back quickly in case of any disappointment."
The franc fell 0.2 percent against the euro to trade at 1.2085 at 0714 GMT compared to the New York close. It was flat against the dollar at 0.939, not far from the three-and-a-half month high it hit against the greenback on Tuesday.
Alpari chief market analyst James Hughes said the franc was near the bottom of a descending channel it had been trading in since nearing parity with the dollar towards the end of July.
"A break below the channel could prompt a move towards this year's lows around 0.893 over the next few weeks," he said.
The Swiss National Bank is expected to reiterated its commitment to keep a lid on the franc at its quarterly monetary policy review on Thursday and is likely to cut its growth forecast for 2012 to around 1 percent from 1.5 percent.
Comments
Comments are closed for this article.