* Dlr, euro up vs Swiss franc; traders cite SNB intervention
* Dollar biggest beneficiary of SNB reports, rises vs euro
* Focus seen quickly switching soon to FOMC meeting
* Higher-than-expected demand at ECB 1-yr tender dents euro
(Adds quotes, updates prices, changes byline)
By Jessica Mortimer
LONDON, June 24 (Reuters) - The dollar shot higher against
the Swiss franc on Wednesday as traders reported the Swiss
National Bank was intervening by selling the Swiss for dollars
and euros.
The dollar was the biggest beneficiary of the intervention
reports, on which the SNB declined to comment. That saw the
dollar index trade higher on the day before the U.S. Federal
Reserve policy announcement later in the day.
The SNB intervention reports also distracted the foreign
exchange markets from the fallout of the European Central Bank's
first-ever one-year tender which was its biggest-ever liquidity
injection and which weighed on the euro.
"It feels like the SNB has stepped up its approach and it
has broadened the scope of its intervention," Brown Brothers
Harriman currency strategist Audrey Childe-Freeman said.
"The spillover effect of this is that the dollar has
strengthened and euro/dollar has turned lower, but I would
expect attention to shift very quickly to the FOMC meeting," she
added.
The dollar jumped two percent against the Swiss franc to hit
a high of 1.0907 francs from around 1.066 francs before the
reports emerged <CHF=>. Traders cited the SNB buying dollars
around 1.0880 francs.
Earlier, market players cited the Bank for International
Settlement buying euros on behalf of the SNB around 1.5125
francs, after it was seen in the market earlier at around
1.5010/15 francs. The BIS declined to comment [].
The euro extended gains to rise as high as 1.5288 francs
<EURCHF=R> from around 1.5010 francs before the intervention
reports. Its gains were not as big as the dollar's and the euro
shed nearly a cent to a session low of $1.4005 <EUR=>.
FOMC NEXT
The sharp moves triggered by the intervention reports
temporarily shifted the foreign exchanges' focus from the
looming policy announcement from the U.S. Federal Reserve.
The Fed, which makes its announcement at 1815 GMT, will also
be under scrutiny for what it says about its asset buying
programme aimed at keeping longer-term interest rates down
[].
The franc's lurch lower also overshadowed the swings that
had been seen after the ECB allotted a higher-than-expected
442.24 billion euros ($612.8 billion) in funds at a flat rate of
1 percent [].
The euro had weakened after the ECB tender, particularly
against perceived higher risk currencies such as sterling and
the Australian dollar.
"Today's 12-month ECB auction further blurs the boundary
between the ECB's monetary expansion strategy and quantitative
easing," said Lena Komileva, head of G7 market economics at
Tullett Prebon.
"However, the Fed remains much more aggressive in its
balance sheet expansion than the ECB and (there is) uncertainty
about what the FOMC will say later today, in terms of assets
purchases, the outlook for interest rates and the impact from
the Fed's language on equities sentiment.".
(Reporting by Jessica Mortimer; Editing by Toby Chopra)
