Forexpros – The U.S. dollar extended gains against the Swiss franc on Thursday, climbing to a three-week high as demand for safe haven assets was bolstered amid growing concerns over weakness in the European banking sector and after mixed results at an auction of French government debt.
USD/CHF hit 0.9498 during European late morning trade, the pair’s highest since December 15; the pair subsequently consolidated at 0.9487, advancing 0.76%.
The pair was likely to find support at 0.9313, Wednesday’s low and short-term resistance at 0.9546, the high of December 15 and a 10-month high.
Risk aversion mounted after a report on Wednesday showed that that overnight deposits at the European Central Bank reached an all-time high this week, indicating that European banks remain unwilling to lend to each other.
Meanwhile, France sold EUR4.02 billion of 10-year bonds at an average yield of 3.29%, compared with 3.18% at a similar auction last month. Bids exceeded the amount sold 1.6 times, down from a bid-to-cover ratio of 3.1 in December.
France is seen as vulnerable to losing its triple-A credit rating in the coming weeks, after it was put on negative watch by ratings agencies Standard & Poor’s and Fitch’s in December, amid concerns over the handling of the financial crisis in the euro zone.
Separately, Swiss National Bank Chairman Philipp Hildebrand was to hold a press conference later Thursday, to explain his wife’s financial transactions after it emerged that she purchased USD500,000 at a time when the central bank was considering imposing a minimum exchange rate on the franc against the euro.
The Swiss franc was almost unchanged against the euro, with EUR/CHF dipping 0.01% to hit 1.2184.
Also Thursday, the U.S. was to release the ADP report on private sector employment as well as data on initial jobless claims and service sector activity.
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