ZURICH: The Swiss franc hit a six-week high in early trading against the dollar on Monday, tracking a firmer euro after solid Chinese manufacturing data lifted risk appetite, buoying the single currency against the safe haven dollar. Priorly the safe haven buyer's first port of call, the franc has shadowed the euro closely since the Swiss National Bank imposed a cap of 1.20 francs to the euro more than a year ago to ease deflationary pressures and ward off a recession. The news from China helped counteract the effects of a downgrade by ratings agency Moody's on the credit rating of the euro zone rescue funds late last week, which put the euro under pressure in late Friday trading. Swiss retail sales for October and the Swiss purchasing managers' index are due out later in the morning, with the PMI expected to rise compared to the previous month but nonetheless to show that Swiss manufacturing contracted for the eighth consecutive month. Traders continue to keep a close watch on the United States' so-called "fiscal cliff", due to start in the new year, which could potentially trigger $600 billion worth of tax hikes and spending cuts. "We still expect the fiscal cliff to dominate the scene. We see two thirds of the expiring measures being rolled over, so the effect on the US economy will not be too heavy," said Vontobel head of forex research Sven Schubert. "Swiss PMI is likely to show manufacturing still contracting, which won't help the Swissie much. But with our relatively optimistic outlook for next year we don't see the risk of the franc breaking the 1.20 cap in the foreseeable future." The franc rose 0.3 percent against the dollar compared to Friday's New York close, to trade at 0.9251 francs per dollar by 0745 GMT. The franc fell 0.1 percent against the euro to 1.2057 francs per euro.

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