Swiss Franc, Yen Strengthen on Speculation U.S. Economic Growth Will Slow

The Swiss franc and the yen rose versus most of their major peers as a gauge of U.S. manufacturing fell more than forecast and investors bet the debt accord President Barack Obama and congressional leaders reached will slow the nation’s growth.

The franc reached the strongest levels on record versus the dollar and euro. The Institute for Supply Management’s factory index fell to 50.9 in July from 55.3 the prior month, after economists in a Bloomberg News survey projected it would drop to 54.5. The House and Senate vote today on the agreement to raise the debt ceiling and lower the deficit by the deadline tomorrow.

“What we’re seeing is a weaker-than-anticipated U.S. economy,” said John McCarthy, managing director of currency trading at ING Groep NV in New York. “In many respects the debt issue and the deadline of tomorrow was theater, but what’s more critical is the health of the U.S. economy. It’s a rout of risk.”

The franc gained 1 percent to 77.73 centimes per dollar at 10:31 a.m. in New York and touched 77.31 centimes. The Swiss currency climbed 1.9 percent to 1.1095 per euro and touched 1.1028. The yen appreciated 0.2 percent to 76.64 per dollar and strengthened 1 percent to 109.39 against the 17-nation currency.

Stocks erased gains and dropped, with the Standard & Poor’s 500 Index declining 0.5 percent.