ZURICH: The Swiss franc slipped against the dollar on Thursday in the wake of a slightly softer euro, but remained within striking distance of a five-and-a-half month high on hopes Spain will soon seek aid and ease concerns over the euro zone debt crisis.
A fall in Spanish bond yields after Moody's affirmed Spain's investment grade credit rating augured well for the country's bond sale, which will look to raise up to 4.5 billion euros later in the day.
"The expectations of a request for Spanish aid and ensuing European Central Bank action has managed to alleviate inflows into Swiss franc assets, helping the SNB's task of protecting its 1.2000 line in the sand for EUR/CHF," said Credit Agricole head of forex strategy Mitul Kotecha.
The Swiss franc has traded in a narrow range against the euro since the Swiss National Bank imposed a 1.20 per euro cap on the franc in Sept. 2011 to keep recession at bay, and there are signs that upward pressure on the franc is easing.
Subdued Swiss export figures on Thursday suggested that policy was still justified.
"The export figures don't suggest the need for any kind of change of the minimum limit (on the franc). The situation has calmed and the SNB should be happy that they don't need to intervene to defend it," said Sarasin's Alessandro Bee.
The franc traded little changed against the euro compared to the New York close, exchanging hands at 1.2099 francs per euro at 0644 GMT.
Against the dollar, the franc softened 0.1 percent to 0.9232 per dollar.
Kotecha said the SNB's foreign exchange reserves growth was likely to slow as the upward pressure on the franc eases, reducing diversification flows from the SNB into other currencies, and maintained a forecast for higher euro-franc and dollar-franc rates year end.
"However, in the short term USD/CHF will edge lower amid general pressure on the USD," he said.
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