Swiss Franc Extends Rise Amid Risk Aversion, Strong GDP Data

The Swiss franc extended its early rally against its major rivals in European deals on Friday, as the Swiss economy recovered unexpectedly in the second quarter, while the European shares declined amid doubts over an interest rate hike by the Federal Reserve at the September meeting.

While the revised U.S. GDP figures helped ease global growth worries, signs that economic conditions are getting better put the possibility of a September rate hike back on the table.

Investors are waiting for further clues on the interest rate outlook as Federal Reserve officials continue their annual meeting in Jackson Hole, Wyoming.

Data from the State Secretariat for Economic Affairs showed that gross domestic product grew 0.2 percent sequentially in the second quarter, offsetting a 0.2 percent fall in the prior quarter. Economists had forecast a 0.1 percent fall.

On a yearly basis, the economy expanded 1.2 percent, the same rate of growth as seen in the prior quarter. The rate was forecast to slow to 0.9 percent.

The franc has been trading higher against its major counterparts, except the pound, in the previous session.

In European deals, the franc was trading at 0.9585 against the greenback and 126.01 against the yen, off early lows of 0.9669 and 125.18, respectively. The franc ended yesterday's trading at 0.9660 against the greenback and 125.19 versus the yen. If the franc extends rise, it is likely to find resistance around 0.95 against the greenback and 127 against the yen.

The franc reversed from early 3-day lows of 1.0871 against the euro and 1.4906 against the pound, and rose to 1.0801 and 1.4732, respectively. At yesterday's close, the franc was quoted at 1.0862 against the euro and 1.4875 against the pound. The next possible resistance for the franc may be located around 1.05 against the euro and 1.47 against the pound.

Looking ahead, the U.S. personal income and spending data for July and University of Michigan's final consumer sentiment index for August, as well as Canada industrial product price index for July are set to be released in the New York session.