Investing.com - The Swiss franc fell further on Monday, falling to two-week lows against the euro and the dollar amid speculation that the Swiss National Bank was unofficially targeting a new trading corridor for the currency against the euro.
USD/CHF was last up 1.12% to 0.9301, while EUR/CHF added 1.45% to trade at 1.0537.
The euro has been floating freely against the Swiss franc since Switzerland’s central bank scrapped its three-and-a-half year old 1.20 per euro exchange rate cap in a shock move last month.
The announcement came a week before the European Central Bank unveiled a €60 billion a month government bond purchasing program aimed at combatting the threat of deflation in the euro zone.
The ECB’s quantitative easing program would have sparked increased demand for the safe haven franc, prompting the SNB to conclude that enforcing and maintaining the cap was no longer justified.
The SNB has indicated that it is still prepared to intervene in currency markets, even after scrapping its cap.
Over the weekend, Swiss newspaper Schweiz am Sonntag reported that the SNB is now unofficially targeting an exchange rate of 1.05 to 1.10 francs per euro. The central bank declined to comment on the report.
Figures from the SNB on Monday showed that sight deposits jumped to 383.32 billion francs last week after an 8% increase in the previous week to 365.48 billion francs. The data indicated that the bank has been purchasing foreign currency in the market.
The single currency remained supported on Monday by hopes that Greece’s new government would be able to reach a compromise with its international creditors on the terms of its bailout.
Data on Monday showed that the final euro zone manufacturing PMI rose to 51.0 in January from 50.6 in December. Activity France, Italy and Greece declined, while activity in Germany slowed from the previous month, underlining concerns over the weak recovery.
The report also showed that producers cut prices at the fastest rate in over 18 months, highlighting concerns over the threat of deflation in the region.