ZURICH: The Swiss franc was steady against the dollar and the euro on Friday, as market focus remained firmly on Cyprus' efforts to solve its funding crisis and avoid a messy default which could force it out of the euro zone.
Fraught negotiations to find a solution to Cyprus' funding woes pushed risk aversion higher, keeping the euro near four month-lows against the dollar and triggering selling of emerging currencies like the Korean won and the South African rand.
"This is going to be a massive weekend for both Cyprus and the eurozone. With so much uncertainty over what the outcome will be, we're going to see plenty of risk aversion in the markets today," Craig Erlam of UK brokerage Alpari said in a note.
Credit Agricole analyst Sireen Haralji said the developments in Europe had increased the likelihood that the European Central Bank would cut interest rates, which would pull the euro lower.
While the Swiss franc has firmed against the euro as the crisis unfolds, it remains below the 1.20 cap imposed by the Swiss National Bank in Sept. 2011 and continued to shadow movements in the single currency.
The franc was steady against the dollar compared to the New York close, trading at 0.9461 francs per dollar.
The franc was also little changed against the euro at 1.2207 per euro.
Despite the market turmoil, some technical and institutional support for the single currency remains in place.
"The 200-day moving average (1.2878) remains a strong support level for the euro dollar," Haralji said, adding that the single currency had also found some recent support from sovereign buyers.
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