By FX Empire.com
The EUR/CHF continued to fluctuate heavily on Monday with the mixed market sentiment and evident reconsideration ahead of the euro area finance ministers which forced them to remain cautious yet still cut their exposure on the euro on a needed correction and supported by hopes that they might be moving forward at least in finding a solution.
The pair declined yet after opening with a bullish gap and the coverage was merely normal as both the euro and the franc remain weak. We can surely see the rumors that suddenly emerged late Friday for direct SNB action to lift the floor to 1.25 wane especially after the SNB settled for stating that the economy faces a tough period and the bank is ready to act yet still did not take the expected action.
The OECD also stated that evident downside pressures are seen on the Swiss economy from the rising franc with slowing export growth and deflation threat and expected the SNB to keep rates near zero and remain ready to expand its liquidity operations and possibly raise the floor to protect the economy from deflation and further vulnerability which accordingly keeps the upside favor for the pair intact and makes the 1.25 look closer to the market.
On Tuesday we expect trading to remain choppy with the market turning to the euro area finance ministers meeting in Brussels with hope they can finalize the details of the EFSF. A draft according to media reports suggested that the facility might as soon as possible start to raise funds to allocate around 10 billion euros in emergency reserves to respond timely to any emergency for any nation and also might go forward in securing 20 to 30 percent of debt laden nations debt auction which will be in the form of tradable partial protection securities and will offer to expand the EFSF standing firepower by three times.
As of 07:00 GMT, the Swiss economy will release UBS consumption Indicator for the month of Oct., yet the release is expected to have slight impact on the pair’s movements.
The euro zone will start the day at 10:00 GMT with the European Confidence data for November, where the business climate indicator could have dropped further to 0.23 from 0.18, while the consumer confidence final reading is expected to linger at -20.4, in the time the economic confidence could have retreated slightly to 94.0 from 94.8.
The industrial confidence is expected lower at -7.0 from -6.6, while the services confidence is expected to linger at 10.2.
The euro area finance ministers meeting in Brussels will be the highlight for our session.
Originally posted here
