The Swiss franc gave up some of its gains in European trading on Tuesday as the currency ran out of steam and failed to test the 1.20 francs-per-euro cap that had been imposed on September 6 in an effort to curb franc strength then.
On Monday, Swiss National Bank chief, Phillipe Hildebrand announced his resignation following a scandal involving a controversial currency trade by his wife.
The absence of a central bank head prompted talk the market could test the bank’s resolve to cap the currency at 1.2000 euros and sent the franc to a three-month high against the euro, the highest level since September 2011.
However, the gains were limited as word soon got out that there would be no central bank policy change under interim SNB chairman Thomas Jordan.
“At this stage we see little room for the SNB to take a step back from their current monetary policy and hence expect them to stay committed to the lower boundary in EURCHF at 1.20 for some time to come,” said UBS economist Reto Huenerwadel in a note.
“Jordan is a good man but relatively new in the job, and it remains to be seen whether the markets will want to test his resolve on the franc early. The next 48 hours will be critical,” said IMD Business School professor Stephane Garelli.
USDCHF climbed to 0.9510 in the early European session by 08:08 GMT, up from the prior session low of 0.9464. EURCHF hit as high of 1.2135 from 1.2104.