Euro and dollar tumble versus Swiss franc

The euro and dollar both plumbed record lows against the Swiss franc on Monday, with European bank stress tests shrugged off as not tough enough and fear ruling over debt problems plaguing the European Union and United States.
The franc has been the G10 currency of choice for investors and traders seeking relative safety and liquidity from concerns that the eurozone's sovereign debt crisis could become a solvency crisis, with Italian and Spanish bond yield spreads over German Bunds widening beyond 300 basis points.
However, euro/Swiss franc's brief tumble below 1.1400 francs early Monday in Asia and a European Union leaders summit on Thursday focused on a second bailout of Greece may cause some long franc positions to get trimmed later in the day.
"Certainly the stress tests were not stringent enough," said Robert Ryan, currency strategist with BNP Paribas in Singapore. The euro fell sharply lower against the Swiss franc early in the Asian trading day to change hands at a trough of 1.1365, according to dealers, down from 1.1501 late in New York on Friday. The pair bounced back up to 1.1445 mid-way through the session.
Trading volume was thinned by a public holiday in Japan. Similarly, the dollar traded as low as 0.8034 francs on EBS, against 0.8129 late on Friday. It then rebounded back to 0.8127 as some dealers covered their short positions.
The euro was down 0.6 percent from late Friday in New York at $1.4075. Support was at $1.4060, the 50 percent retracement of the move up from $1.3838 to $1.4283.
Dealers have had some trouble pushing the euro out of a trading range against the dollar in the past three months, with political negotiations over the US debt ceiling running dangerously close to an August 2 deadline after which Washington can't pay its bills. Attention had shifted to the next emergency meeting of EU leaders scheduled for Thursday, amid signs they are edging nearer to a proposal to buy back Greek debt.
In a worrying sign for the euro, credit default swaps of Italy and Spain - European countries that are highly indebted but not as fundamentally at risk as others - have been tightening up with Greece. The 30-day correlation is running higher than the 1-year average, Thomson Reuters data showed. That suggests CDS spreads are reflecting contagion fears.