The franc weakened against the euro and the dollar for a second day

The franc weakened against the euro and the dollar for a second day, as the Swiss National Bank said it is ready to "take steps" to combat deflation, fueling speculation that he may intervene.

The yen fell against most major pairs as Reuters reported that Japan said it is likely to increase their reserves to intervene in the currency market. The dollar was on the verge of a weekly loss against 12 of its 16 most-traded counterparts as positive U.S. data spurred economic investment in riskier assets. Reports next week may show confidence among U.S. consumers including improved housing remains weak.

"It does not take much to get the market to move at Christmas or New Year and, in view of the euro-Swiss acceleration to the minimum of a couple of days, does not take much for a little investment, "said Jeremy Stretch, executive director of foreign exchange strategy at the Canadian Imperial Bank of Commerce in London.

"The SNB could have learned the lesson of how painful and expensive unilateral intervention," said the stretch. "It might want to rush back into the same type of risk at the moment."

The franc has depreciated 0.4 percent against the euro at 1.2619 from 14:12 in London, and weakened to 96.22 cents per dollar from 95.87 yesterday.

"Concerns about stability in the euro area have led to renewed financial market tensions," pushing up the franc, the central bank based in Zurich, said in its quarterly report published on its website today day. "If these tensions were exacerbated and put a strain on economic developments in the euro area, that too would have a detrimental effect on the Swiss economy. If there is a risk of deflation, the Swiss National Bank will take the necessary measures to ensure price stability. "

Six Days of Records

The Swiss currency strengthened to a record $ 1.2439 against the euro on December 22 after touching new highs for six consecutive days. Has appreciated 15 percent against the euro and 7.1 percent against the dollar this year, as investors sought refuge from the debt crisis of the region's troubled currency.

The yen weakened against 13 of his 16 fellow seniors. Japan is likely to increase their reserves to one side to intervene in the foreign exchange market by 5 trillion yen (60 billion) in the next fiscal year, Reuters reported, citing unidentified sources. The pool is 145000000000000 yen, the report said.

Treasury Bonds Drop

The yen gained 12.1 percent this year, according to indexes of correlation-weighted currencies, which track a basket of 10 currencies of the developed countries.

The euro gained for a second day against the dollar. S & P said yesterday that France deserves a rating of AAA sovereign credit because of the "richness and depth" of its economy and the view that the government of President Nicolas Sarkozy will consolidate its budget deficit.

credit rating of France was vulnerable to a rescheduling because its budget deficit and because its banks are the largest holders of debt issued by so-called peripheral countries, analysts said before yesterday's announcement.

The common currency traded little changed at $ 1.3118 after strengthening 0.3 percent to $ 1.3149.

The vote of confidence in France came hours after Fitch Ratings cited concern for the environment "financing" for the government of Portugal and banks, as well as the economic outlook as a court of the nation's long-term foreign issuer in local currency default rating to A +, the fifth-highest level of AA-. The outlook is negative.

China voices support

The euro will end 2011 about $ 1.50 European accelerates growth led by Germany, Stacey Gavin, interest rate strategist at Barclays Capital in Sydney, said in an interview.

"If the euro is down to around $ 1.25 level, then that's a good time to load up on the history of European growth because Germany is growing rapidly," he said.

The demand of the common currency was also boosted by Chinese officials this week expressed support for the European Union. The strengthening of the state of the euro will help "promote the construction of a diversified global monetary system," said China's ambassador to the EU Song Zhe yesterday in a statement on the website of the Ministry of Foreign Affairs.

His comments follow those of Chinese Vice Premier Wang Qishan said on 21 December that his country had taken "concrete steps" to help the EU meet its debt crisis.

The confidence index for the Conference Board's U.S. consumer rose to 56.3, according to the median estimate in a survey before the report of the group from New York, expiring December 28.

S & P / Case-Shiller index of home values in 20 U.S. cities fell 0.2 percent in October from the same month of 2009, the first decline year by year, since January, a report is expected to show December 28. The gauge probably fell 0.7 percent from the previous month after adjustment for seasonal variations.

"Recovery of the whole world seems to be recovering," said Tsutomu Soma, a provider of bond and currency of Okasan Securities Co. in Tokyo. "It seems that there are risks in the sense that probably negative for the yen and the dollar."