Despite a doubling in short CHF positions on the IMM in the latest data, CHF has become the most compelling financing currency for carry trades in the wake of the announcement this morning that the Russian central bank had begun to add JPY to its reserve mix. JPY carry trades suffered some as a result but CHF fell against the JPY and maintained a weak tone against most other majors. The USD backed and filled today with cross activity overshadowing USD direction with little fresh news of note today. USD/CHF dipped to 1.2694 on investment house sales this morning before settling into a tight range between 1.2705 and 1.2730 for the balance of the session.
Looking ahead to Europe tomorrow, dealers will focus on the ZEW survey. -20 is expected after last month's -22. Later in the day, the US reports its TIC data for August. Last month showed a sub-par surplus in the capital account, insufficient to cover the deficit. Another poor figure amid record trade deficits could halt the USD bull-run in its tracks. A figure below $70 bln will probably prompt some USD/CHF sales tomorrow. 1.2665 is key support near-term.
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