Swiss Franc Weakens Versus the Euro and the Dollar as Stock Markets Climb

The Swiss franc weakened against the dollar and euro after stocks rallied and a U.S. labor market report eased concern that the recovery in the world’s largest economy is faltering, damping demand for safety.

The franc fell against all of its 16 most commonly traded peers as the Stoxx Europe 600 Index climbed 1 percent and the Standard & Poor’s 500 Index advanced 0.9 percent. Initial jobless claims dropped by 27,000 to 451,000 in the week ended Sept. 4, Labor Department data showed today. Jobless benefits applications were projected to fall to 470,000 from a previously reported 472,000 for the prior week.

“We have seen a move higher in equities, and that is the catalyst” for the franc’s move, said Jeremy Stretch, global head of foreign-exchange strategy at Canadian Imperial Bank of Commerce’s CIBC World Markets unit in London.

The franc weakened 0.4 percent to 1.0154 per dollar at 5:30 p.m. in London, after it reached 1.0061 yesterday, the strongest level this year. It depreciated 0.3 percent against the euro to 1.2909 after yesterday reaching 1.2766, the strongest level since the single currency was introduced in 1999.

Investors traditionally buy the franc during times of financial turmoil because of the perceived stability of the Swiss economy and reduce their holdings when they want to take on more risk. The franc has risen 4.6 percent this year according to Bloomberg Correlation-Weighted Currency Indexes.

“The franc has lost a bit of its allure, but I would be cautious about chasing it too far in the short term,” Stretch said. “There’s still a huge number of headwinds out there” for the global economy, and the franc may rally, he said.

To contact the reporter on this story: Stephen Morris in London at smorris39@bloomberg.net.

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