The Swiss franc was near flat against the euro and dollar in early trading on Thursday ahead of the European Central Bank's weekly policy meeting. The ECB is widely expected to hold its key short-term interest rate at 4.00 percent but markets will be looking for clues on the central bank's future rate path from ECB head Jean-Claude Trichet.
The franc was largely flat against the euro, trading at 1.6567 per euro and 0.02 percent stronger against the dollar at 1.2167 per dollar. The franc has been under pressure as investors make use of the differential between Switzerland's relatively low short term benchmark interest rate of 2.50 percent and the 4.00 percent in the euro zone to fund carry trades by borrowing the franc.
Global stock markets, which have recently been bouyant, have also encouraged investors to stick to their carry trade positions. "The increased risk appetite among international investors of late not very surprisingly lifted the euro/franc even higher in admittedly very light price action on Wednesday," said UBS analyst Reto Huenerwadel.