Fears over the Swiss economy will continue in the short term and this limit any franc support on defensive grounds.

The Swiss franc found some support weaker than the 1.50 level against the Euro on Thursday, but it was back on the defensive against the dollar with lows near 1.1800 on a wider US rebound.

The Swiss National Bank announced a surprise interest rate cut of 0.50% which took the central rate down to 2.00% from 2.50% previously. The bank had already voiced increased concerns over the economy, especially with a downturn in export conditions, and there were warnings over a GDP contraction for the next few quarters. This was the second unscheduled rate cut since the September policy meeting and indicates an important increase in unease over prospects with the bank unwilling to let rates increase relative to the Euro-zone.

The franc still derived some significant defensive support as risk appetite faded in line with weakening asset prices as Wall Street was subjected to heavy selling for the second successive session.