Swiss inflation data knocked the Franc in early European trading but with the Dollar remaining on the defensive against the majority of the market, USD/CHF failed to sustain the higher levels. Swiss October CPI was released today showing a drop to just 0.3% on both the month and on an annualized basis.
As a result many have penned in the Q4 (mid-December) SNB hike as the last in the current tightening cycle but one aggressive Swiss powerhouse has maintained their view that Q1 07 will still see a 25bp hike from Roth & Co. Bids in USD/CHF at 1.2445/50 based the late European dip while EUR/CHF selling into 1.5900/05 is expected to continue weighing on the Dollar pair intraday.
Stops are seen below 1.2425 with 1.2475/80 offers capping. Looking ahead, US data set for release today has Q3 productivity on the early run, 13:30 GMT, with September Factory Orders then set for release at 15:00 GMT. Fisher comments complete the daily diary. Going forward, many call the US Employment report, due tomorrow, the key s/t event-risk for the USD.
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