The Swiss franc trod water against the dollar and the euro on Wednesday as investors sat on the sidelines ahead of the Swiss National Bank's quarterly monetary policy assessment later in the week. The franc was steady against the euro at 1.2124 compared to the New York close. Against the dollar, the franc was also little changed at 0.932.

The SNB is expected to confirm its commitment to maintaining the cap on the franc of 1.20 to the euro when it announces its monetary policy decision at 0830 GMT on Thursday. After safe-haven buying pushed the currency up by a quarter in just a few months, the central bank set the cap in September 2011 to stave off the threat of deflation and recession.

Moves by Swiss banks Credit Suisse and UBS to start charging other banks for holding the franc and deter rivals from hoarding the safe-haven currency have weakened the unit to around 1.21 over the past week. UBS economist Reto Huenerwadel said the moves by the Swiss banks and a debate over how the SNB would react to any interest rate cut from the European Central Bank next year have driven the franc down against the euro.

Copyright Reuters, 2012