The Swiss franc trod water against the euro on Friday after Swiss National Bank board me Jean-Pierre Danthine reaffirmed the central bank's commitment to defend a franc-euro cap imposed in September to stave off recession. The franc rose 0.4 percent against the dollar to trade at 0.9098 compared to the New York close. Against the euro, the franc was flat at 1.2051.
In a speech to traders in Zurich on Thursday, Danthine said enforcing the six-month old 1.20 cap against the single currency remained "front and centre" of the SNB's agenda. Since the cap was set, the safe-haven franc has traded more or less in tandem with the euro, which has risen in recent weeks as the bloc's debt crisis eases.
Danthine said the risk remained the eurozone crisis could flare up again and the SNB stood ready to take further measures if the economic outlook and risk of deflation required. "The SNB really made clear yesterday that they are absolutely determined to keep the 1.20 mark. Those were harsh words to the market," said Sarasin economist Jan Poser.
"The mere fact that investors are still willing to hold onto an overvalued Swiss francs shows investors are still looking for a safe-haven," he said. Data on Thursday showing shrinking factory activity in China and the eurozone dealt a blow to risk sentiment, as investors fretted about a slowdown in the global economy.