The Swiss franc rose against all of its major counterparts on demand for a refuge as European leaders struggled to agree on a solution to the region’s debt crisis before a summit this weekend. The euro fell versus the dollar on speculation the Oct. 23 meeting may be delayed or a second session may be held. The franc remained 2.5 percent below the ceiling of 1.20 versus the euro imposed last month by the Swiss National Bank. The dollar advanced versus the yen for the first time in four days as Philadelphia manufacturing unexpectedly expanded. “The severity of the moves we’re seeing is evidence that people are still focused on the headlines,” said Brian Kim, a currency strategist at Royal Bank of Scotland Group Plc in Stamford, Connecticut. “You’re starting to get the sense of more disappointment coming out of the euro, so people are beginning to shy away from it.” The Swiss franc appreciated for the first time in three days versus the euro, rising 0.9 percent to 1.2310 at 12:05 p.m. in New York. The euro declined 0.6 percent to $1.3676 and decreased 0.5 percent to 105.15 yen. The U.S. currency rose 0.1 percent to 76.88 yen. The Swiss currency was the biggest winner today among the 10 developed-nation currencies that are tracked by Bloomberg Correlation-Weighted Currency Indexes, rising 0.9 percent. The euro dropped 0.3 percent, and the yen fell 0.2 percent. ‘Buying Pressure’ “Traders have until now been short the Swiss franc and long the yen, and now they’re trying to square those positions, which is putting selling pressure on the yen and buying pressure on the Swiss franc,” said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp., the world’s largest custodial bank, with more than $26 trillion in assets under administration. “The uncertainty in Europe remains very high, and expectations are all over the place.” A long is a bet a currency may gain in value. The Swiss National Bank imposed a ceiling of 1.20 versus the euro on Sept. 6 and resumed purchases of foreign currencies to curb the franc’s gain, which was threatening exporters. The currency had rallied 13 percent this year a day before the central bank imposed the ceiling. “The Swiss have a risk that they’re going to get totally buried,” said John Taylor, chairman and founder of the currency hedge fund FX Concepts LLC, in a London interview. They “were looking to buy time and have the euro solve itself, and that would make this thing very easy for them. But what happens if the euro doesn’t solve itself, which is what I believe is going to happen.” Taylor’s firm manages about $5 billion. ECB Role The euro fell versus the dollar as politicians remained divided over the role of the European Central Bank, which has rejected using its balance sheet to bolster the 440 billion-euro ($608 billion) bailout fund. French President Nicolas Sarkozy flew yesterday to Frankfurt to meet with officials as they attended an event to honor the departing ECB President Jean-Claude Trichet. Sarkozy, German Chancellor Angela Merkel and International Monetary Fund Managing Director Christine Lagarde left the event at the Frankfurt Opera House without commenting. European leaders may hold a second summit next week as negotiations on increasing the firepower of the European Financial Stability Facility stall, Deutsche Presse-Agentur reported, citing unidentified government officials in Berlin. Die Welt, citing unidentified people close to Germany’s governing coalition, said the government isn’t discounting a delay in the summit because of stalling negotiations on the leveraging of the rescue fund. Group of 20 Finance chiefs from the Group of 20 nations have urged Europe’s leaders to act “decisively” to resolve the debt crisis that has roiled international markets. The 17-nation euro rose earlier after European Commission President Jose Barroso said a “positive outcome” was possible at the meeting in Brussels. “We have been proposing the leveraging of the EFSF,” Barroso told a conference today in Brussels. “I hope this will be agreed on Sunday. I am encouraged by the work going on. I think a very positive outcome on Sunday is possible provided there is political will and a sense of compromise from all participants.” Investors should sell the euro versus the dollar, betting it will weaken to $1.33, according to Societe Generale SA. Philadelphia Fed The dollar rose versus the yen after the Federal Reserve Bank of Philadelphia’s general economic index increased to 8.7 in October from minus 17.5 last month in the biggest one-month rebound in 31 years. The median forecast of 58 economists in a Bloomberg News survey was for a reading of minus 9.4. Readings greater than zero indicate expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware. Japan plans to spend an extra 4 trillion yen ($52 billion) to cope with a surging yen that could damp an export-led recovery in the world’s third-largest economy, according to documents obtained by Bloomberg News. The yen’s appreciation of almost 6 percent this year versus the dollar has prompted the government to adopt a multipronged approach to currency policy. While threatening intervention, Japanese authorities have offered aid to companies hit by the yen’s gain and highlighted the lower cost of making overseas acquisitions. Japan imports about 80 percent of its energy needs. The Bank of Japan has intervened in the currency market three times in the past 13 months. To contact the reporter on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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