By FX Empire.com
The EUR/CHF continues to move within the same trading range since the beginning of the week and with the eased debt woes the euro gathered the pace, especially as the franc declined against a strong dollar as the market unwinds from the strong relief rally seen in the past sessions.
More weakness for the franc was seen from the reported drop in producer and import prices, where on the year prices fell 2.0% in September which further raised deflation fears for Switzerland and accordingly the risk of further SNB measures to weaken the franc.
Nevertheless, investors remain upbeat on the prospect for a resolution to the debt crisis and see leaders walking in the right path, especially after EC President Jose Barroso presented a broad plan to contain the crisis including economic governance, bank recapitalization, utilization of the EFSF, and helping Greece contain its crisis.
The market though remain tensed as the plans to recapitalize banks is still not clear and with the end of the week on Friday the eyes will turn to the G20 finance chiefs meeting as they will surely discuss the development in Europe and how to contain the crisis including the focus on the banking sector.
The euro area will end the week with inflation figures for September at 09:00 GMT where the CPI index is expected with 0.8% rise on the month following 0.2% gain and on the year to come in line with the flash estimate at 3.0% after 2.5% in August. Core CPI inflation is expected to rise to 1.5% from 1.2%.
As for the August trade balance that data is also due at 09:00 GMT and investors will assess if exports are helping the euro area growth and whether the trade improved from July’s seasonally adjusted 2.5 billion euro deficit.
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