June 3 (Bloomberg) -- The franc weakened for the first time in four days against the euro as signs Europe’s economy is stabilizing damped demand for Swiss assets as a haven.
The franc declined at least 0.2 percent against all of its 16 major peers after a report showed manufacturing in the euro region fell at a slower pace than initially estimated in May. Readings for Switzerland, Norway, Sweden and the U.K. also exceeded analyst predictions. The currency is still “highly valued” after sliding against the euro and dollar this year, Swiss National Bank President Thomas Jordan said, according to an interview with the Schweiz am Sonntag published yesterday.
“If we continue to see a stabilization within some of the core European data, then that’s going to provide some support for the financial markets and lead to an unwinding of safe-haven positions,” said Ian Stannard, the head of European foreign-exchange strategy at Morgan Stanley in London. “That will leave the Swiss franc exposed.”
The Swiss currency fell 0.4 percent to 1.2458 per euro at 2:48 p.m. in Zurich. The franc, which investors buy at times of uncertainty, has declined 3.1 percent against the euro this year as the 17-nation bloc’s fiscal crisis abated.
Switzerland’s currency slid 0.3 percent to 95.77 centimes per dollar.
“The Swiss franc’s use as a safe haven, particularly from the developments within Europe, is now likely to start declining,” Stannard said. “That then could see its status change from a haven into a funding currency and that’s when it will really start to come under pressure.”
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