ZURICH: The Swiss franc traded at a fresh four-month low against the euro on Wednesday in slack trading ahead of the Bank of Japan's post-policy meeting announcement and testimony from U.S Federal Reserve Chairman Ben Bernanke. The franc was slightly weaker against the dollar, though hints from two U.S. Fed regional presidents that the central bank could continue its bond-buying scheme took some of the wind out of the greenback's sails. "The euro-Swiss franc is in a small trend channel here, the immediate target is 1.2550, with 1.265 at the next level and support at 1.2450, while the dollar-Swiss should grind up towards parity," said one Zurich-based trader. "Things are pretty quiet at the moment with all eyes on the Bernanke statement, but after that we'll definitely see some action." Bernanke will speak at 1400 GMT, before the release of the Fed's last policy meeting minutes. The franc fell 0.1 percent against the dollar compared to the New York close to trade at 0.9712 per dollar by 0551 GMT. The franc was 0.2 percent lower against the euro at 1.2540. In a report released on Tuesday the International Monetary Fund said the Swiss National Bank could use weakness in the franc to unwind the large base of foreign currency reserves built up to keep a lid on the franc. The SNB set a cap of 1.20 Swiss francs to the euro in September 2011 to help stave off recession and the threat of deflation. Its foreign reserves soared last year as the SNB sold francs heavily to defend the cap as investors looking for safety amid the euro zone crisis snapped up the safe-haven Swiss unit. But some analysts saw little need for the central bank to rush to action. "At a time when the IMF seems to increasingly make the case for a return to a free float in the Swiss franc exchange rates, we are not looking for a major reduction in the SNB's balance sheet anytime soon," said UBS economist Reto Huenerwadel. "The latest largely unchanged overall Swiss franc sight deposits at the SNB make no case for an active SNB anytime soon either."

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