USD/CHF opened in NY near the day's 1.2050 high, but that breach of Monday and Tuesday's 1.2040 high proved futile, just as the overnight breach of Tuesday's 1.1977 low did. The new year-and-a-half low at 1.1962 was instigated by fresh US subprime concerns and rumors a US bank was in trouble. Traders squared up ahead of the US economic releases and Bernanke"s Hill appearance.
CPI was up 0.2% overall & core v +0.1% & +0.2% f/c. Housing Starts were up 2.3%, but single-family starts fell again, while Permits fell 7.5%. The 12.9% surge in multi-family housing starts may borrow from future single-family growth as buyers and builders lower their sights in the face of the housing slump and higher borrowing costs.
Fed Chair Bernanke kept inflation high on his talking list but the gist of his comments was that the housing issue remains a concern and that lenders would not be bailed out of their bad loans. Unsaid but understood is that the Fed may ease rates if the housing pullback undermines the economy. Philly Fed, Claims, LEI and more from Bernanke are Thursday's risks. Swiss Trade also due. Weak US stocks & Tsy yields are the main USD drag.
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