The Swiss franc inched up against the euro on Monday ahead of the Swiss PMI as low-yielding currencies such as the franc benefited from the unwinding of carry trades. "The carry trade unwinding is stabilising the franc," Unicredit analyst Armin Mekelburg said. "The franc has held up relatively well against the euro given recent weak Swiss data such as the KOF indicator."
The franc traded at 1.6131 per euro compared to a New York close on Friday of 1.6157 per euro. Last year, the franc suffered from carry trades, in which investors borrow the low-yielding franc and invest in higher-yielding currencies such as the euro or the pound. This trend has reversed in the course of the economic downturn as worries about economies with high interest rates such as the euro zone or the UK are increasing. Markets now focus on the Swiss Purchasing Managers' Index which is expected to fall to 53.1 points in August, following the KOF growth barometer, which has hit a 5-year low. The franc traded little changed against the dollar at 1.1006 per dollar.