Euro fall against Swiss franc

The euro hit all-time lows against the Swiss franc on Wednesday, with investors increasingly nervous about the single currency's prospects given the euro zone's peripheral debt problems.

Latest blows to the euro zone's struggling, heavily-indebted economies came from Moody's, which warned it might cut Portugal's rating, and Fitch, which said the same about Greece. [ID:nTOPNEWS]

 

"The rating agencies are not saying anything new but the question is how does this market want to take it," said Geoffrey Yu, currency strategist at UBS. "Clearly these are terrible market conditions and the speed at which the euro is losing ground against the Swiss franc is a bit disconcerting."

Liquidity has dried up ahead of the Christmas holiday and year-end and in thin conditions investors were selling the euro to express a bearish view about the euro zone while preferring the safe-haven status of the Swiss franc.

The euro EURCHF= was down 0.3 percent at 1.2511 Swiss francs. It also fared badly against the high-yielding Australian dollar, EURAUD=R, falling to a low just under A$1.3100.

Traders said there were barriers around 1.2500 francs in the euro/Swiss franc cross. Other possible near-term targets include 1.2300, while in the longer term it could look to around 1.1760, an Elliot wave equality target, though the franc's low yield may deter fund inflows.

The euro was up 0.36 percent against the dollar at $1.3142 EUR=, climbing above its 200-day moving average of $1.3095 and off a near three-week trough of $1.3073 set on Tuesday. Traders said bids by Asian central banks was supporting the euro.

Still, not many were optimistic about the euro.

"In the current environment of very thin market liquidity, the euro seems to be perceived as carrying too much risk into the year-end, discouraging investors from establishing fresh long positions," said Valentin Marinov, currency strategist at CitiFX.

Marinov expected the euro to underperform against riskier currencies like the Australian dollar and the Scandinavian currencies.