On Wednesday, the USD/CHF pair continued its drop amid some hopes in markets European leaders will introduce a comprehensive and decisive plan in their meeting later in the day inBrussels, which damped demand on the dollar as a favorite safe haven.
Still, the main focus is on the vital European meeting which will probably determine the main direction in the market in the coming period.
German Chancellor won the Bundestag lower house of parliament approval for expanding the EFSF on Wednesday, giving Merkel the power to negotiate the expansion process during the summit.
Some analysts said today’s meeting may not come out with details which may be announced on November 7-8 when European finance ministers meet. Nonetheless, further delay in the plan will probably cause disappointment in the market, thereby giving more downside pushes to the pair.
Moreover, the upbeat earnings by many European companies, better-than-estimatedU.S.data also gave more bullishness to the sentiment.
U.S. durable goods excluding transportation equipment soared 1.7%, higher than both revised and forecasted readings of -0.4% and 0.4%.
The Swiss franc, on the other hand, had lost its appeal as a refuge after the several interventions that took place since September and amidst speculations the bank will raise the euro cap against the franc to 1.40 from the current 1.20, especially as some earnings reports showed that many Swiss companies were affected by the franc’s appreciation.
On Thursday, the main highlight of the week which is U.S. GDP annualized for the third quarter, which is predicted to record 2.3% from 1.3% growth in the second quarter, will be available at 12:30 GMT. At the same time, initial jobless claims for the week ended Oct. 22 and continuing claims for the week ending Oct. 15. Thereafter, specifically at 14:00 GMT, pending home sales will show 0.1% rise in Sep. from the previous 1.2% fall.
The data is predicted to have a remarkable impact in the pair’s movements yet the effect may be temporarily as the main attention will be on the results of the European summit.
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