The euro and the dollar rose against the Swiss franc on Thursday as traders remained jittery about possible intervention by the Swiss National Bank to weaken its domestic currency. The dollar was underpinned after the Federal Reserve did not expand its programme of buying government and mortgage debt and said at the conclusion of its policy-setting meeting on Wednesday it saw signs the deep U.S. recession was easing.
Traders cited talk of the SNB selling francs for euros and dollars, possibly via the Bank for International Settlements, but both the SNB and BIS declined to comment [ID:nLP72272].
Market participants on Wednesday said that the SNB had been selling the Swiss currency for euros and dollars.
"In the wake of yesterday, people were always going to be nervous and we're in thinner summer markets and that always leaves potential for rumours or nerves to afflict markets," said Jeremy Stretch, strategist at Rabobank in London.
Renewed weakness in the Swiss currency helped the dollar reverse earlier declines against a basket of major currencies.
The euro, however, was little changed against the dollar, but held below a two-week high hit on Wednesday as the market digested the impact of the European Central Bank's massive injection of one-year funds into money markets at Wednesday's tender.
The ECB poured 442 billion euros of one-year funds into money markets on Wednesday with a record 1,121 banks taking up the offer.
"It's a marginal negative for the euro because of the sheer scale and breadth of the take-up but I don't think necessarily the markets are focusing on it too much at this point," Stretch added.
Traders brushed off data showing a sharp fall in euro zone industrial new orders in April, as it merely reinforced the market's view that the region's economy had been weak in the early part of 2009.
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