Swiss franc down vs dollar on risk aversion

"Caution will prevail in the near term as markets begin to question the veracity of the rally in risk assets registered over recent weeks," Credit Agricole analysts wrote in a note.

Weak Spanish unemployment data, a lower-than-expected improvement in the euro zone sentiment index and political uncertainty in Italy and Spain all dragged the common currency lower.

The franc fell 0.2 percent against the dollar to trade at 0.9099 by 0818 GMT compared to the New York close.

Against the euro, the franc dipped 0.1 percent to trade at 1.228.

After more than a year of trading close to the 1.20 per euro cap imposed by the Swiss National Bank, the franc weakened through the 1.25 per euro mark in January for the first time since May 2011 on improving euro zone sentiment.

That has meant the SNB has not had to intervene to defend the 1.20 mark, with the amount of cash commercial banks hold with the central bank falling last week to their the lowest level since August, a sign of market confidence.

But the franc is still seen as overvalued and Swiss exports fell in December, data showed on Tuesday, dragged down by weak demand from the country's top trading partner Europe.