The Swiss franc pulled back from a 5-month high against the euro on Monday after the Federal Reserve's emergency cut in its discount rate triggered a rally on Wall Street, soothing investors' worries and making them less risk averse.
The franc was some 0.11 percent lower against the euro at 1.6292 francs per euro versus Friday's close, having hit a 5-month high of around 1.6179 in Friday's session, while the franc was 0.06 percent weaker versus the dollar at 1.2073 francs per dollar.
"The Fed cut made investors less concerned about developments going forward, ie less risk averse, and given the significant moves we have seen in recent days this has generated some reversal, albeit very limited," said Calyon economist Henrik Gullberg.
The franc has been boosted by jittery markets, which have prompted investors to unwind risky carry trades that had pressured the franc lower, as investors sold the franc to fund buys in higher yielding currencies. Many analysts expect the franc's recent strengthening to be a passing phase as investors unwind carry trades and buy the Swiss currency - but that weakening will set in again over the coming year as interest rate differentials make it an attractive funding currency.
Swiss rate futures signal that market expectations for an eighth consecutive quarterly 25 basis points rate hike in September have fallen dramatically, although economists still expect the Swiss National Bank to cling to its programme of tightening interest rates.