Investing.com - The dollar moved sharply lower against the Swiss franc on Thursday after Switzerland’s government increased the amount of capital banks must hold to guard against mortgage write-downs.
USD/CHF hit 0.9020, the lowest since January 14 and was last down 0.93% to 0.9030.
The pair is likely to find support at 0.8985, the low of January 14 and resistance at 0.9080.
The Swiss franc strengthened after the Swiss government said it agreed to the Swiss National Bank’s request to raise the level of capital banks must hold to underpin mortgage lending, in order to curb the country’s booming housing market.
The new rules on mortgage related capital reserves will come in to effect from June 30 this year.
"The SNB has concluded the sustained strong increase in mortgage loans and the prices of Swiss residential properties has caused the imbalances to become even greater in the current low interest-rate environment," the Swiss government said.
The euro was also lower against the Swiss franc. EUR/CHF hit 1.2306, the lowest since January 14 and was last down 0.26% to 1.2314.
Earlier this month SNB Chairman Thomas Jordan reiterated that the bank’s minimum exchange rate floor of 1.20 per euro would continue to be the focus of monetary policy implementation for the foreseeable future.
Elsewhere, the euro was higher against the dollar after data released on Thursday showed that private sector activity in the euro zone got off to a strong start in 2014 as growth picked up in Germany, while the rate of the downturn in France eased.
EUR/USD hit 1.3646, the highest since January 16 and was last up 0.64% to 1.3633.
The euro zone’s composite output index rose to a 31-month high of 53.2 in January, up from a final reading of 52.1 in December, fuelling hopes that the European Central Bank will not need to ease monetary policy further in order to shore up the recovery.
Manufacturing activity in Germany expanded at the fastest pace since May 2011 this month.