Euro at record low versus Swiss franc in New York

The euro fell to a record low against the Swiss franc on Wednesday, with losses seen accelerating on concern the eurozone debt crisis will continue well into 2011. But the euro edged up versus the dollar, helped by a report that China was ready to buy significant amounts of Portuguese sovereign debt and after data showed a smaller-than-expected upward revision to US third-quarter economic growth.
The euro fell as low as 1.2493 Swiss francs on trading platform EBS, down about 16 percent so far this year, as deteriorating debt problems in peripheral eurozone economies enhanced the safe-haven status of the Swiss currency. "We view the surging Swiss franc heading into year end as an ominous warning sign for further trouble ahead in the eurozone in early 2011," said Lee Hardman, currency economist at the Bank of Tokyo-Mitsubishi UFJ in London.
"It appears that smart money investors are pre-emptively bailing funds out of the euro zone with Switzerland providing a safe port to ride out the eurozone sovereign debt storm that appears to loom on the horizon," Hardman said. In early trading, the euro was down 0.4 percent at 1.2509 Swiss francs, after taking out option barriers at 1.2500 francs, traders said.
The euro was up 0.1 percent against the dollar at $1.3082, having hit a session high of $1.3183 and above its near three-week trough of $1.3073 set on Tuesday. The Jornal de Negocios daily newspaper reported China is looking to buy between 4 billion euros ($5.26 billion) and 5 billion euros of Portuguese sovereign debt to help the country ward off pressure in debt markets, though it gave no details of its sources. China's central bank declined to comment on the report.
"This is a small positive for the euro," said Valentin Marinov, currency strategist at CitiFX. News that the ECB had allocated 149.5 billion euros in its three-month tender dented sentiment slightly, as it showed a greater-than-expected reliance by European banks on cheap funding.
With liquidity drying up ahead of the Christmas holiday, Marinov expected the euro to underperform against riskier currencies like the Australian dollar and the Scandinavian currencies. Against the yen, the euro was fell 0.3 percent to 109.41. The dollar also declined 0.3 percent to 83.49 yen. The dollar extended declines after data showed US economic growth was a touch higher than previously estimated in the third quarter, but below expectations.