* Swiss franc up, hits 1 mth high vs euro after SNB comments
* Further Swissie gains limited, market wary of intervention
* Dlr pauses from losses as stocks slump, U.S. data awaited
By Naomi Tajitsu
LONDON, June 18 (Reuters) - The Swiss franc hit a one-month
high against the euro on Thursday after the Swiss National Bank
said it was satisfied with stemming the rise of its currency,
while the spectre of more intervention capped further gains.
The dollar was little changed as losses in European shares
helped to prop up the U.S. currency following its slide against
the euro and a basket of currencies in past days, while sterling
fell sharply after weak UK retail sales and public finance data.
The SNB held interest rates at a record low on Thursday,
keeping its target bank for three-month Swiss franc LIBOR at
0.00-0.75 percent with an aim to lower it to 0.25 percent.
[]
SNB Governor Jean-Pierre Roth said he would continue to stop
an irrational rise in the Swiss franc, but analysts said he did
not confirm the SNB had acted beyond initial intervention after
its last policy meeting on March 12, when the euro jumped to
nearly 1.5350 francs from around 1.4750 francs.
Analysts said some traders were testing the resolve of the
Swiss National Bank on intervention, and the market was figuring
out how low the euro/Swiss franc pair had to fall before the
central bank would enter the market, they said.
"Despite a relatively clear statement that the policy is
aimed at preventing Swiss/euro appreciation ... The market is
left having to try to discover what its tolerance level is. That
means only one direction -- euro/Swiss lower," said Ray Farris,
currency strategist at Credit Suisse in London.
The Swiss currency rose as high as 1.5007 per euro
<EURCHF=R> after Roth's statements, according to Reuters data,
its strongest since May 15. It reversed an initial fall to
around 1.5118 per euro shortly after the rate decision.
DOLLAR UP VS EURO, STG
At 1127 GMT, the euro was slightly down on the day at
$1.3933 <EUR=>, struggling after European shares <> fell
0.6 percent.
Losses in the euro helped to prod the dollar index 0.2
percent higher, recovering some losses suffered in the past two
days.
The day's biggest loser was sterling, which tumbled more
than 1 percent against the dollar to a one-week low of $1.6187
<GBP=D4> after UK retail sales fell unexpectedly in May, while
public sector net borrowing hit a record high. []
Markets were looking ahead to U.S. jobless claims at 1230
GMT and the Philadelphia Fed index at 1400 GMT
Wednesday's subdued U.S. inflation data the previous day had
dented the U.S. currency as it dampened speculation of a U.S.
interest rate hike by the end of the year.
Many investors were starting to look ahead to a Federal
Reserve policy meeting next week to see whether the central bank
will provide more clarity about its view of the economy and
outlook on rates.
"An FOMC warning next week that there is too much
uncertainty surrounding the outlook for a sustained recovery and
a pick-up in inflation ... to justify rate hikes may provide the
spark that ignites the fire of a more pronounced reversal of
recent market themes," Tullett Prebon analysts wrote in a note.
Dollar sentiment was also hurt by Standard & Poor's
announcement it was lowering its credit rating on 18 U.S. banks
on Wednesday, saying increased regulation and market volatility
would hurt the sector. []
(Reporting by Naomi Tajitsu; editing by Chris Pizzey)
