The Swiss franc strengthened against the euro but held largely flat against the dollar on Tuesday as markets eyed Thursday's Swiss National Bank meeting for further clues on the strength of the economy.
The SNB is widely seen raising interest rates by 25 basis points at Thursday's meeting, putting the market's focus on its outlook for the Swiss economy and possibility for further rate increases.
Some market participants argue that room for further SNB interest rate tightening is gradually running out, UBS analyst Reto Huenerwadel said. "There is quite some room left for further monetary tightening steps going forward given the actual momentum of the Swiss business sector," Huenerwadel said in a note.
The franc was 0.17 percent higher versus the euro at 1.6126 per euro. The franc was near unchanged at 1.2251 per dollar and down 0.26 percent against the Japanese currency at 95.75 yen per franc. While the franc has risen from its lows against the euro on worries about the global economic outlook, analysts expect the currency to remain relatively weak in the coming months.
With Swiss interest rates among the lowest in the world, the franc has been under pressure for months as investors borrow and sell it to fund investments in higher-yielding currencies.