The Swiss franc rose strongly against the dollar and the euro on Thursday as investors positioned themselves for weaker markets after the previous session's rally, with traders becoming more risk averse. "The European market is going to be in the negative and in the US we are seeing strong negative numbers for futures," said Clariden Leu's Sandro Baechli.
"So we are expecting some sell-off at the market open pushing the dollar lower and the franc higher," he said. The franc was trading 0.83 percent higher against the dollar at 1.1736 francs to the dollar and was also stronger against the euro at 1.6501 per euro.
"Today people are a little bit nervous because of the volatility in the market, which performed very well yesterday. Risk aversion is increasing and people are turning to the safe-haven franc," Baechli said.
US banking heavyweight Morgan Stanley posted a fall in third-quarter profit on Wednesday, missing expectations, reminding investors that the credit crisis was not over. Deutsche Bank's chief executive said the liquidity crisis would hurt third-quarter profit at the German bank.
Some economists said the Federal Reserve's decision to cut interest rates was also putting pressure on the dollar. "The interest rate differentials are now more negative for the dollar and we are expecting a hike in December in Switzerland, which will be positive for the franc," said Credit Suisse's Marcus Hettinger.