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Swiss Franc Climbs Amid Risk Aversion

The Swiss franc strengthened against its key counterparts in the European session on Thursday amid risk aversion, with investors adopting a cautious stance ahead of Italy's constitutional referendum that would determine the future of Prime Minister Matteo Renzi.

Renzi has vowed to resign in the event of "no vote" on Sunday and that could be a final blow to Italy's membership in the European Union.

The European Central Banks meeting is due next week, with most analysts expecting the bank to extend its bond buying program beyond March.

Data from the Federal Statistical Office showed that Swiss retail sector turnover declined less than expected in October.

Retail turnover dropped 0.5 percent in October from prior year, much smaller than the expected 2.2 percent decrease.

On a monthly basis, retail sales growth accelerated to 1.2 percent in October from 0.3 percent in September.

Data from the Swiss SVME purchasing managers association showed that Swiss manufacturing activity rose for the fourth month in row in November, touching its highest level since February 2014.

The index rose to 56.6 in November, from 54.7 in October.

The franc showed mixed performance in the Asian session. While the franc held steady against the pound and the euro, it climbed against the yen and the greenback.

The franc climbed to 1.0120 against the greenback, off its early low of 1.0178. Continuation of the franc's uptrend may see it challenging resistance around the 1.00 region.

The franc advanced to 113.01 against the yen, its strongest since April 25. If the franc-yen pair extends rise, 114.5 is possibly seen as its next resistance level.

The latest survey from Nikkei showed that Japan's manufacturing sector continued to expand in November, although at a slightly slower pace, with a PMI score of 51.3.

That's down marginally from 51.4 in October, although it remains well above the boom-or-bust line of 50 that separates expansion from contraction.

The Swiss currency hit a 2-day high of 1.0756 against the euro, following a decline to 1.0783 at 3:45 am ET. The next possible resistance for the franc is seen around the 1.06 mark.

Data from Eurostat showed that the euro area unemployment rate declined to the lowest in more than seven years in October.

The jobless rate dropped to 9.8 percent in October from revised 9.9 percent in September. This was the lowest since July 2009.

On the flip side, the franc fell to a 2-1/2-month low of 1.2826 against the pound, reversing from an early high of 1.2693. On the downside, the franc may find support near the 1.31 area.

Looking ahead, Markit's U.S. manufacturing PMI for November and U.S. construction spending for October are set to be published shortly.

At 9:00 am ET, Federal Reserve Bank of Dallas President Robert Kaplan will participates in a moderated Q&A before the St. Mary's University forum on entrepreneurship breakfast series, in San Antonio.

by RTT Staff Writer

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