The Swiss franc leaped against the euro and the dollar Wednesday as the absence of new measures to contain the currency's strength from the Swiss National Bank and euro zone debt worries spurred a relief rally.
Demand for the safe-haven Swiss franc returned with the SNB conspicuous by its absence from the currency forwards market since last week. The SNB announced no new measures after making an announcement on three of the four Wednesdays in August.
The euro was last down 1.9 percent to 1.1620 francs , while the dollar slumped 1.9 percent to 0.8048 franc , retreating from a recent high of 0.8239 struck Monday. Traders cited Swiss franc buying by U.S. and Swiss investors.
Switzerland's economy minister said the currency is "massively overvalued."
Mounting concerns about European sovereign debt and the prospect of additional U.S. Federal Reserve stimulus drove investors back into the safety of the Swiss franc, according to Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
"While the threat of SNB intervention may slow the franc's rise, it is unlikely to meaningfully deter investors from the safe harbor offered by the franc."
The SNB's intervention in the swap market and moves to flood the Swiss banking system with francs and cut interest rates to near zero has toppled the Swiss franc from record highs hit earlier this month.
Investors took profits after the euro failed to break through 1.2000 francs earlier this week, analysts said, while the Swiss franc looked oversold on daily charts, having hit its lowest level since early July on Monday.
In the United States, data showed the pace of U.S. private sector job growth slowed in August for the second month in a row.
The ADP data precedes Friday's key U.S. Labor Department report on August's unemployment and payrolls.
The labor market is key to U.S. Federal Reserve monetary policy and continued weakness could increase the likelihood of another round of bond buying by the Fed.
A German cabinet decision that set policymakers on course for parliamentary ratification of changes to the euro zone's bailout fund helped push the single currency briefly to a session high of $1.4470 versus the dollar
But it was last down 0.2 percent at $1.4412. Traders said month-end demand for dollars from investors rebalancing their stock and bonds portfolio was weighing on the euro.
"The difficulty the market has at the moment is finding a reason to buy any currency. The euro zone has got a peripheral problem, the U.S. has got a potential QE problem," said Daragh Maher, deputy head of FX research at Credit Agricole.
"The Swiss franc remains a safe play. If numbers do not improve, people remain nervous and the euro zone situation remains grim, we can expect to see the franc strengthen again."
Minutes from the Fed's Aug. 9 meeting showed policymakers discussed a range of unusual tools they could use to help the economy, adding to expectations the Fed may flag a third round of quantitative easing at its two-day meeting in September.
The dollar was up 0.1 percent at 76.74 yen.
With the yen hovering near a record high against the dollar of 75.941 hit earlier in August on trading platform EBS, market players remain wary of the potential for Japanese authorities to intervene to sell the yen.
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