The Swiss franc touched a record high against the dollar on Friday and was within reach of a record peak against the euro, though trade was thin on the last trading day of the year. Many Asian centres, including Japan, are closed and traders expect little market action over the course of the day, apart from some end-of-month and end-of-year corporate orders.
"Fundamentally, we think dollar/Swiss should be around parity in one-month's time and euro/Swiss around 1.30, but fundamentals don't really come into it when investors are scared about sovereign risk," said Gareth Berry, G10 FX strategist for UBS in Singapore.
The dollar set an all-time low of against the Swiss franc of 0.9343 francs on trading platform EBS. With that fall, the dollar dipped below support at around 0.9355, where a trendline drawn off the dollar's lows in December 2008, November 2009, and October 2010, now lies. The dollar later pared its losses to stand at 0.9375 franc, up 0.3 percent from late US trading on Thursday.
The euro edged up 0.3 percent versus the Swiss franc to 1.2458 francs, having dropped to a record low of 1.2398 francs the previous day. "The continuation of the sell euro, buy Swiss story will move into next year. Europe will definitely be a big focus and I wouldn't be surprised to see a European country default in 2011," a trader at a US investment bank said.
For now though, the dollar was languishing and last traded at 81.52 yen, near a seven-week low of 81.28 yen hit on Thursday. The dollar is only about two yen away from a post-World War Two record low of 79.75 yen set in 1995. The euro edged up 0.1 percent on the day to $1.3297, but is down some 7 percent against the dollar over the year. Hit by the eurozone debt crisis, the euro lost 19 percent versus the yen and 16 percent against the Swiss franc. The dollar is about 12 percent lower against the yen and down more than 9 percent versus the Swiss franc this year.
In contrast, the Aussie has rallied 13 percent against the dollar in 2010 and is up a whopping 22 percent against the euro, making it one of the best performing currencies in 2010. It last traded at $1.0164, within easy reach of a 28-year peak of $1.0198 set on Thursday. Traders said there is selling interest at $1.02 and support at $1.0130.