Swiss franc steadies

The Swiss franc was steady against the euro and the dollar in cautious early trading on Thursday ahead of a key Spanish bond auction seen as a litmus test of investor risk appetite as worries begin to re-emerge over the euro zone debt crisis. The franc was also steady against the euro at 1.202 francs per euro. The franc was little changed against the dollar compared to the New York close, trading at 0.9159 francs per dollar.
The franc traded close to the 1.20 francs per euro cap imposed in September a day after Thomas Jordan, confirmed as Chairman of the Swiss National Bank on Wednesday, reaffirmed the central bank's commitment the cap but quashed expectations it could be raised in the near term.
"Jordan's first words made it very clear that the SNB has NO intentions of coming back to their policy of a lower boundary looking for a gradual weakening of the franc instead," said UBS economist Reto Huenerwadel in a note. "The SNB directorate in its current form stands for more of the same on the Swiss monetary front. We are thus not surprised that the reaction in EURCHF and USDCHF has been muted at best," Huenerwadel said.
A solid Spanish auction is expected to produce a relief rally in equities and support the beleaguered euro, while a weak one could add to pressure on the single currency and drive investors towards the safe-haven dollar. Significant upcoming events that could affect risk appetite include an International Monetary Fund meeting on Friday and jobs and mortgage data from the United States.