ZURICH: The Swiss franc was treading water against the euro on Friday, following the announcement of Spain's crisis budget that many saw as a step towards a bailout to stabilise its public finances.
News on Thursday that the euro zone's fourth largest economy had presented a detailed timetable for economic reforms and a tough 2013 budget that focused primarily on spending cuts assuaged some market jitters, helping lift the euro from a two-week low against the dollar.
But investors were still nervous, with Moody's review of Spain's sovereign rating due at the end of the month. Moreover, the Spanish budget goes to parliament on Saturday and debates could last weeks.
"Euro/Swiss is trading as a function of risk appetite," said UBS economist Reto Huenerwadel.
"The nervousness about the political and fiscal situation in the Eurozone prevails for another day."
After the Swiss National Bank set a cap of 1.20 per euro a year ago to shield the country from recession, the franc spent months trading not far off the intervention mark. Yet with market participants increasingly hopeful the debt crisis might be on the mend, the franc has been on a weakening course against the common currency for the past few weeks.
The franc was flat against the euro compared to the New York close, trading at 1.2095 by 0545 GMT.
The franc rose 0.2 percent against the dollar to trade to 0.9356.
"The market continues to sit just below the 0.9420 June low, this together with the short term downtrend at 0.9482 is expected to hold the initial test," analysts at Commerzbank said.
Comments
Comments are closed for this article.