* Euro rises to seven-week high vs USD, 11-week high on CHF
* CHF hurt by Swiss banks move to charge fees, pay negative
* Aussie dollar a standout performer despite rate cut
By Ian Chua
SYDNEY, Dec 5 The euro hovered at seven-week
highs against the greenback on Wednesday but struggled against
the Australian dollar, which gained broadly as investors brushed
aside a cut in interest rates to focus on its still relatively
The euro fetched $1.3094, having climbed as high as
$1.3109, a level not seen since mid-October. Against the Swiss
franc, the single currency rose more than 0.5 percent to an
11-week high around 1.2146 francs.
The euro benefited from a selloff in the Swiss currency
after Switzerland's largest banks said earlier in the week they
would charge fees and pay negative rates on some franc deposits.
Traders also noted stop-loss selling as technical levels
were breached, prompting Barclays Capital analyst Raghav
Subbarao to warn the move may not be sustainable.
"We caution against expecting a further rally in EUR/CHF
from here," Subbarao said, adding safe-haven flows underpinning
the franc have not fully disappeared and negative interest rates
in the 1970s were largely unsuccessful.
"Furthermore, this is not a move by the SNB but rather by
two private sector institutions, which further limits its
Optimism that Greece will secure much-needed loans to avoid
a default also grew after Athens announced better-than-expected
terms for its debt buyback.
The strength in the euro saw the dollar index skid to
79.610, its lowest since Oct. 23. The index has fallen some 2
percent since mid-November and is flirting with support near
79.700, a level representing the 61.8 percent retracement of its
Against the Australian dollar, the euro was little changed
at A$1.2505. The Aussie, however, climbed 0.5 percent
on the greenback to $1.0485.
Traders said a quarter point cut in the cash rate on Tuesday
to a record-matching low of 3.0 percent was widely anticipated.
The lack of any forward guidance by the Reserve Bank of
Australia (RBA) led some in the market to conclude that further
easing may be limited.
The Aussie last stood at $1.0466, having climbed as high as
$1.0485. Immediate resistance is seen around $1.0500. Aussie
dollar bulls may further be embolden if third-quarter gross
domestic data due at 0030 GMT surprises on the upside.
"The AUD/USD is not rallying on the rate cut itself, but the
shifting of expectations from a declining rate environment to a
stable one, at least for the next few months," said Christopher
Vecchio, currency analyst at DailyFX.
The next RBA policy meeting is not until early February.
Yet interbank futures are still pricing in another
50 basis points worth of easing next year, with markets giving a
62 percent chance of a cut at the next policy meeting in
A speech by RBA Deputy Governor Philip Lowe at 0920 GMT on
'What is normal' will be closely watched for his reaction to the
rally in the Aussie dollar.
Investors will also be keeping an eye on a private survey of
China's growing services sector due around 0145 GMT, looking for
more signs the world's second largest economy is indeed