On Tuesday trading, the Swiss franc weakened against the dollar after a report showing that Swiss consumer prices dropped 0.5% from a year earlier, marking the sharpest drop since Oct. 2009, raising speculations the SNB would intervene again to boost the economy especially as the most recent data showed slowdown in growth along with the fall in inflation.
Other data fromSwitzerlandshowed that the SNB’s holdings of reserves dropped to 229.3 billion Swiss francs compared with a revised CHF245.0 billion in October
Last week, the Swiss economy recorded 0.2% expansion in the third quarter compared with the revised 0.5% in the second quarter and median estimates of 0.1%, while PMI manufacturing showed further contraction to 44.8 in Nov. from 46.9 in Oct.
Moreover, the pair followed the general sentiment in the market which is fueled with concerns after Standard & Poor’s warned the euro-area nations with a possible credit rating cut in case European leaders failed to quell jitters and tackle the debt crisis during the coming summit on Friday.
S&P also has placed the debt rating of 15 nations of the euro zone on a negative review as S&P said “systemic stresses” are growing up, while credit conditions tighten in the euro zone.
The warning put European leaders under pressure before they gather on Friday in the awaited summit that will probably involve change in treaty to resolve debt crisis.
The jittery situation gave support to the dollar as the most favorite refuge, where eyes will be in the EU summit on Friday to see whether European leaders would be able to introduce stricter budget discipline.
On Wednesday, 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%. In theU.S., MBA mortgage applications for Dec. 2 at 12:00 GMT.
The data is expected to affect the pair due its importance, yet it is expected to be also affected by the general sentiment which is tracking the latest developments in the euro region.
Originally posted here
