On Tuesday, the U.S. dollar’s advance took the pair higher on concerns in markets that the European anti-debt crisis plan, that will be introduced on October 23, will not provide a complete fix to the two-year crisis, according to the latest announcements by German officials, and on lower-than-estimated Chinese growth figures. Still, the main focus is on the euro area to see European leaders’ ability to come out with a comprehensive and decisive plan at their next meeting.
Thus, after the dovish tone seen this week from German officials, investors resorted to the dollar once again as a favorite safe haven amid the latest several interventions by the SNB to curb the franc’s runaway. Moreover, the Chinese economy expanded 9.1% in the three months ended September compared with the 9.5% growth recorded in the second quarter and median estimates of 9.3%, adding to worries that the sluggish growth pace would continue in the fourth quarter.
On the other hand, Switzerland’s main trades union organization Tuesday urged the SNB and government to raise the ceiling of the euro against franc to 1.40 from the current 1.20 to avoid relapsing into recession, where it still believe that the franc is overvalued. On Wednesday, while the Swiss economy lacks fundamentals, the U.S. has a busy day; the start will be with MBA mortgage applications for October 14 which will be available at 11:00 GMT, followed by housing starts and building permits and CPI at 12:30 GMT.
Housing starts, which will provide evidence about the status of the housing market that triggered the 2008 crisis, are expected to increase to 594,000 in September from 571,000 in August, while building permits will probably show a fall to 610,000 from the prior 620,000. On the other hand, CPI for the year ended September is predicted to rise to 2.1% from the preceding 2.0%. Thereafter, eyes will be on the Fed Beige book at 18:00 GMT.
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