Despite the volatility seen for the euro on Tuesday the EUR/CHF still found the space to move to the upside after the Swiss data signaled rising deflation threats and raised expectations for the SNB to take action.
As we previously expected, rising deflation threats means a stronger EUR/CHF, the SNB stated numerously its readiness to take action if the economy needed and to support stability the CPI fell 0.5% on the year and dropped 0.8% in EU harmonized means which is assuring of the mounting pressures. Also the foreign currency reserves ticked higher in November that further signaled to markets that the SNB might move and really soon.
We still expect further franc softness until the SNB expectations wane again with no remarks from the bank as they will likely await till the critical ECB and EU Summit conclude to see what the next course of action will be and how aggressive to they need to be in defending the economy.
As of 05:15 GMT, the Swiss economy will release unemployment for Nov. with expectations referring to steadiness in the seasonally adjusted reading at 3.0%.
Germany will start the session at 11:00 GMT with the Industrial Production index for October, where the non-seasonally adjusted annual index is projected to expand by 3.2% from 5.4%, while the seasonally adjusted monthly index could have expanded by 0.3% from the previous drop of 2.7%.
Originally posted here
