Swiss franc pressured as peg talk persists
Aug 15 (Reuters) - The euro and dollar rose to their highest level in two weeks against the Swiss franc in Asia on Monday on caution the Swiss National Bank would act further to weaken the franc and as markets found a steadier footing.
Speculation the SNB will peg the Swiss franc to the euro gained ground after Swiss newspaper SonntagsZeitung reported on Sunday the central bank was poised to set a target at a little over 1.10 francs per euro.
Barclays Capital analysts warned expectations of a peg seemed overdone, believing the franc would rally once again this week if markets started to change their view on its probability.
"We remain CHF bears in the medium run - we agree with the SNB's view that it is "massively overvalued" - but, this week, we are not expecting the recent appreciation of EUR/CHF to hold," said Paul Robinson, strategist at Barclays Capital.
The historic downgrade also came at a time when fears the U.S. would fall back into recession mounted and worries about the euro zone sovereign debt problems spread to the region's banking sector.
This saw the safe-haven Swiss franc rocket to record highs against the dollar and euro, a move that threatened the Swiss economy and prompted the SNB to slash interest rates to near zero and pledge more action to weaken the currency.
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