Forex - USD/CHF edges lower on increased safe haven demand

Investing.com – The U.S. dollar snapped three days of gains against the Swiss franc on Tuesday, as safe haven demand was boosted amid mounting fears over global growth prospects, overshadowing speculation the Swiss National Bank will peg its currency to the euro.

USD/CHF hit 0.7768 during European morning trade, the lowest since August 12; the pair subsequently consolidated at 0.7812, retreating 0.4%.

The pair was likely to find support at 0.7547, the low of August 12 and resistance at 0.7996, Monday’s high and two-week high.

Preliminary data released earlier showed that German economic growth nearly stalled during the second quarter, increasing by a seasonally adjusted 0.1%, below expectations for a 0.5% increase.

A separate report said that the euro zone’s gross domestic product increased by a seasonally adjusted 0.2% during the second quarter, slowing from growth of 0.8% in the preceding quarter and below expectations for a 0.3% gain.

The downbeat data added to worries over growth prospects for the single currency bloc amid the region’s ongoing sovereign debt crisis.

Meanwhile, markets were awaiting a meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy in Paris later in the day.

On Monday, German government spokesman Steffen Seibert said the introduction of euro bonds will not be on the agenda when the two leaders meet, while adding that the German government did not expect a major breakthrough.

However, the Swissie’s gains were capped amid growing speculation that the Swiss National Bank would set an exchange rate to weaken the franc.

The Swissie was also higher against the euro, with EUR/CHF slumping 0.66% to hit 1.1254.

Later in the day, the U.S. was to produce official data on building permits and housing starts, as well as reports on import prices, the capacity utilization rate and industrial production.