Swiss franc hits 4-months high - driving forces of CHF gains

The Swiss franc was edging at four month's highs against the dollar, which tends to be bought by investors in times of risk aversion, with USD/CHF at 0.9744, holding just above Tuesday's lows of 0.9693, the weakest level since October 22.

The recent unemployment flashes in Switzerland were unchanged at 3.4%. Since it stepped up into a higher range in late January, EUR/CHF was able to clear the range that has been stuck trading around 1.07/1.1020 range but for now again started giving gains in the 1st week of Feb. That still leaves USD/CHF determined by EUR/USD.

After the ECB eased by less than expected in early December, the SNB also held off from easing. It still threatens to do more if necessary but shows a reluctance to deliver on that threat - i.e. the SNB does not seem likely to cut rates further in an attempt to push EUR/CHF higher.

Swiss trade surplus increased to CHF 2.54 billion in December of 2015 from CHF 1.455 billion a year earlier but below market consensus, as exports rose 1.9% while imports fell by 5.6%. For full year of 2015, trade surplus reached CHF 36.61 billion, the largest on record as exports dropped by 2.6% to CHF 202.90 billion while imports fell by 6.9% to CHF 166.29 billion.

The dollar was trading close to the lowest levels in over a year against the safe haven yen on Wednesday as investors continued to seek refuge from global market volatility.

The dollar was trading close to the lowest levels in over a year against the safe haven yen on Wednesday as investors continued to seek refuge from global market volatility. Investors were looking ahead to testimony by Fed chair Yellen later in the day for further clarity on the path of interest rate hikes this year in the wake of recent mixed U.S. economic reports, which would likely to be dovish tone.