ZURICH: The Swiss franc hit its strongest in a month against the dollar on Monday, rising alongside the euro as traders unwound bearish bets on the single currency after stronger-than-expected US jobs data last week improved investor's risk appetite.
The franc has been trading in tandem with the euro against the dollar since last September, when the Swiss National Bank set a cap of 1.20 on the safe-haven unit. Investors seeking a refuge from the euro zone crisis had been piling into the franc, sending it up sharply against the euro and threatening to tip Switzerland into a recession and deflation.
Data last Friday showed US employers hired the most workers in five months in July, soothing investor fears about the US economy's outlook and stirring demand for risky assets.
The improvement in risk sentiment gave support to the euro and commodity currencies, which tend to get a lift when optimism about the global economy's outlook improves.
"The EUR/USD reaction to the US jobs data was particularly interesting, hitting a high of 1.2444 as stop losses were triggered on the upside. Further euro gains will be difficult to achieve, however," said Mitul Kotecha of Credit Agricole.
"Speculative market positioning reveals that euro short positions have dropped to their lowest level in several weeks, suggesting less scope for further short covering," Kotecha said.
No economic data for Switzerland is due on Monday, though Tuesday will see inflation data for July released at 0715 GMT, as well as data for July on the central bank's forex holdings.
Both items will give insights as to how sustainable the SNB's cap is. F o rex reserves have been on the rise of late as th e SNB buys euros to defend the cap in the face of the ongoing de b t crisis.
The franc was up 0.1 percent against the dollar versus Friday's New York close to trade at 0.9694 by 0537 GMT, off an intra-day peak of 0.9652, its strongest since July 6.
The franc was flat at 1.2014 against the euro.
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