ET:Swiss franc edges higher vs euro as markets await data
ZURICH: The Swiss franc inched higher against the euro and the dollar on Tuesday as investors shortened euro positions after the single currency gained some ground in recent days.
"We're seeing a slight correction in euro-franc but it is mainly related to the euro and the dollar. Nothing much is happening in the Swiss franc right now," Commerzbank forex strategist Antje Praefcke said.
The euro hovered close to an 11-month high against the dollar on Tuesday after gaining a boost late last week on news about euro zone banks' early repayments of three-year loans to the European Central Bank.
Praefcke said stimulus for the franc could come from the Swiss purchasing managers' index on Friday. Analysts in a Reuters poll expect it to rise to 50.5 points in January versus 49.5 points in the previous month.
Switzerland's lead indicator KOF is due on Wednesday and could fall to 1.16 in January from 1.28 in December, according to the poll. The UBS consumption indicator for December will also be released on that day.
The franc traded in tandem with the euro for more than a year, since the Swiss National Bank capped it at 1.20 per euro to fend off deflation and recession, but has weakened lately on signs parts of the euro zone banking system may be on the mend.
Analysts at St. Galler Kantonalbank said euro-franc could rise above 1.2500 if the resistance at 1.2490 was broken. "What will happen next? When will we see a correction? In our view, euro-franc should not be able to maintain itself above 1.25 for too long," they said in a note.
They said dollar-franc was stuck between euro-franc and euro-dollar. "We're focusing on euro-dollar. We remain cautious and keep our long position."
The franc rose 0.2 percent against the euro to trade at 1.243 per euro by 0748 GMT compared to the New York close. It was up 0.1 percent against the dollar at 0.925.
Investors were also looking for clues on how the SNB could react to the recent weakening in the franc.
Chairman Thomas Jordan said last week the central bank was ready to use all tools at its disposal to keep the still strong franc in check. Vice-chairman Jean-Pierre Danthine downplayed speculation the SNB could move the cap to a weaker level.
