In the European morning speculation of a weaker than expected KoF Leading Indicator was rife. Given the recent official rhetoric for a slowdown in the alpine economy into 2007 the calls for a third consecutive fall in the forward looking barometer were on the mark.
However, with the previous September reading revised lower (2.19 from 2.32) the fall into October saw the index hit 2.00. This data kept the CHF on the defensive and USD/CHF was bought as high as 1.2571 in the wake of the numbers. Bulls were tipped to be targeting a run at 1.2590 but the failure to break any higher and the impending US data risk has quickly seen these targets cut back.
Looking ahead, US advanced Q3 GDP is set for release at 12:30 GMT but with talk of a weaker than expected number also doing the rounds here there is potential for choppy USD/CHF trading ahead. +2.2% is expected but numbers as low as +1.8% are in circulation. Following this, the 13:45 GMT release of final October Michigan sentiment will provide the market with the next Dollar event- risk.
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