Swiss Franc Strengthens Versus Euro and Dollar After U.S. Payrolls Tumble

The franc capped weekly gains against the euro and dollar after a report showed the U.S. lost more jobs than forecast last month, adding to concern the recovery is slowing and stoking demand for the Swiss currency as a haven.

The franc extended its advance for a fourth week against the dollar on speculation more asset purchases from the Federal Reserve may follow, driving down the greenback. U.S. employers cut staffing by 95,000 workers, Labor Department figures in Washington showed today, above the median estimate of a 5,000 drop from economists surveyed by Bloomberg News.

“Dollar-Swiss is still largely driven by quantitative- easing expectations,” said Manuel Oliveri, a foreign-exchange strategist in Zurich at UBS AG, the nation’s largest bank. “Uncertainty will also keep the Swiss in demand as a safe haven asset versus the euro.”

The Swiss currency has appreciated 0.3 percent against the euro since Oct. 1, breaking a three-week streak of declines. It traded 0.5 percent stronger at 1.3389 centimes as of 3:49 p.m. in London. It was 0.6 percent stronger at 96.05 centimes per dollar, after yesterday strengthening to 95.55 centimes, the third record in as many days, according to Bloomberg data. The currency has appreciated 1.3 percent against the greenback this week and 5.8 percent in the past four weeks.

The European Central Bank signaled no intention to loosen monetary policy yesterday. President Jean-Claude Trichet said there’s “absolutely no change” in the central bank’s stance from a month ago and that it will continue to gradually phase out its non-standard liquidity measures.

Swiss Jobless Rate

“More than ever, exchange rates should reflect economic fundamentals,” Trichet said yesterday after holding the ECB’s benchmark rate at 1 percent. “Excess volatility and disorderly moves have adverse implications for economic and financial stability.”

Concern the Federal Reserve will expand its purchases of government debt deepened after Fed Chairman Ben S. Bernanke last week said more monetary easing has “the ability to ease financial conditions.”

Quantitative-easing expectations are now fully priced in for the dollar, Oliveri said.

The Swiss jobless rate fell to the lowest in more than a year in September as a strengthening economy prompted companies to increase their workforce.

Unemployment fell to 3.7 percent from 3.8 percent in August when adjusted for seasonal swings, the State Secretariat for Economic Affairs in Bern said today in an e-mailed statement. That’s the lowest since May 2009 and in line with the median forecast of eight economists in a Bloomberg News survey.

Investors traditionally buy the franc during times of economic turmoil because of the perceived stability of Switzerland’s economy and current account surplus, and offload the currency when they want to take on more risk.

The franc has climbed 5.1 percent this year against a basket of currencies, according to Bloomberg Correlation- Weighted Currency Indexes.

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

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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