A bad session for the growth challenged Dollar and with carry trade unwinds, a good session for the Swissy. The US administration has accepted that growth may have come off the tracks by revising down both this year and next year's growth forecasts. For 2006 the pace has been dropped to 3.1% from 3.6% and for next year growth is now forecast at 2.9% from 3.35 before.
USD/CHF opened in London at 1.2397 and slipped to 1.2360 as Europe reacted to the White House news. Sideways action into mid-morning Europe and then the carry trade issue surfaced once again. Fairly aggressive squaring of yield plays put a bid into the Swiss Franc and both USD/CHF and EUR/CHF fell sharply through support points.
Pre-US holiday position squaring is likely to dominate action into the European close with the Dollar losing more ground. USD/CHF has a support point at 1.2290, which might attract profit taking while EUR/CHF has a prop at 1.5860, a little off the pace.
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