The EUR/CHF continued to trade in a tight range on Thursday with the recovery in markets across the board that took advantage of US markets absence and weakened the dollar which accordingly keep the pair stable as both the euro and franc recovered against the dollar.
The sentiment was generally supported by the steady Germany growth at 0.5% expanding from the previous quarter and also better than expected IFO confidence figures that eased some of the jitters. The market saw the decline overrated and the dollar gains exaggerated as they hoped that the meeting between France, Germany and Italy would produce something concrete to ease the jitters.
We do not have any fundamentals queued for release on Friday yet eyes will be on any outcome from the meeting between Sarkozy, Merkel and Mario with updates on the current abysmal situation. The market already ignored somehow Fitch’s downgrade for Portugal to Junk yet the next step by policy makers can make it or break it, especially as the leaders might debate the ECB option as conditions worsen and delay on the EFSF is clearly aching markets to the extent it is now somehow starting to be seen as overdue.
We also have a new Italian zero-coupon auction which will be watched not for demand and for the discount on the bond and whether we will have another major disappointment like Germany’s earlier in the week.
Originally posted here
