ZURICH: The Swiss franc ticked up against the euro on Tuesday, rebounding from an eight-month low hit the previous session, as concern about Spain's government finances dampened optimism sparked by the European Central Bank's bond buying programme.
After spending months hovering near the 1.20 per euro cap set by the Swiss National Bank a year ago, the franc has fallen against the single currency the past week, hitting an eight-month low of 1.21831 francs on trading platform EBS on Monday.
The franc was trading up 0.1 percent compared to the New York close at 1.2146 at 0545 GMT.
The euro was down slightly against the dollar, supported by optimism that the ECB bond plan could help Madrid survive its debt crisis, though some are concerned that Spanish bond yields have risen over the past few days.
Citing a weak global economy, the Swiss government cut its outlook for growth this year to 1 percent from 1.4 percent on Tuesday. Yet it said the ECB's bond buying plan had reduced the risk of the crisis escalating further.
The government forecast assumes that the franc will fall 3.6 percent on a trade weighted basis and 2.5 percent in 2013.
The franc was flat at 0.9276 against the dollar, just shy of a 19-week high, with the greenback broadly under pressure due to the US Federal Reserve's blast of monetary stimulus.
The Fed's decision last week to launch a third round of quantitative easing until the jobs market improved substantially, has whetted investor appetite for risky assets, while weighing on the dollar.
In another sign of market stress easing, the pace of the rise of the amount of cash commercial banks hold with the Swiss central bank slowed sharply last week from big increases in June and July.
"With an increase of merely 2.6 billion francs, the increase in the SNB's balance has been once of the smallest since early May," said UBS economist Reto Huenerwadel.
"Very much in line with the price action in EURCHF of late, similar data are a confirmation of the reduced pressure on the cross and hence the SNB for now."
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