The Swiss franc lost ground against the euro on Tuesday after a decline in Swiss import and producer prices signalled inflationary pressures were dwindling. But the Swissie stayed close to the Swiss National Bank's mooted intervention threshold of 1.46 francs to the euro as recent SNB comments have suggested preventing an excessive rise in the value of the franc was also key for Switzerland's exporters.
The franc dipped 0.1 percent against the euro compared to the New York close, trading at 1.4666 per euro. "We see little prospect of the SNB abandoning their policy of intervention in the near term, as the process of Swiss bank deleveraging continues and sovereign credits risk concerns continue to haunt the euro," said UBS analyst Gareth Berry.
"Euro-Swiss remains a sell on rallies in our view, and we maintain our 12-month target of 1.46," he said. Market players will look to Swiss trade balance data due on Thursday for further indication of how willing the SNB might be to continue intervening.
The franc has been trading in a tight range below 1.46 to the euro after the SNB was seen intervening last Friday to cap a rise to new highs against the euro. "Recently the market sold off to 1.4570, the location of the March low. The move below here was minor and unsustained and the market saw a violent reaction higher. We can only assume it has based and dips lower will find interim support at 1.4645/30," said Commerzbank analyst Karen Jones said.
The franc was 0.3 percent higher against the dollar at 1.0743 per dollar, tracking gains in the euro against the greenback as expectations European finance ministers would not say anything new on solving Greece's debt woes prompted players to trim short positions.
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