The Swiss franc on Monday held onto gains won against major currencies last week when an increasingly activist Swiss National Bank again let its daily repo rate rise, fuelling speculation for higher rates.
The SNB let rates at its daily repo auction rise by eight basis points last week to 2.43 percent, an unusual escalation that pushed the franc back from 9-year-lows against the euro as markets began to price in a more aggressive monetary policy.
The franc was mostly unchanged compared to late Friday at 1.6555 francs per euro. The franc was near unchanged at 1.2293 percent versus the dollar. The SNB expressed concerns at its quarterly interest rate decision last week that the weak franc will fuel inflation in Switzerland's fast-growing economy, and signalled rates would need to continue to rise to head it off.
"Markets by now price in a fair chance of an inter-meeting hike until September or a 50 basis point hike at the next monetary assessment by the SNB," wrote economist Reto Huehnerwadel in UBS' daily research note.
Low interest rates in Switzerland continue to support so-called carry trades, where investors borrow in francs or other low-yielding currencies such as the yen, sell the currency and then invest in a higher-yielding currency elsewhere.