Swiss jobless remained unchanged at 3.1% despite a slight rise in the number of unemployed. The headline figure was slightly better than what some economists had expected and points to a continued solid employment situation in the mountain economy.
The data backs our argument that the SNB will finish 2006 with a flourish and hike their target LIBOR bands by a further 25bps at the Q4 meeting next week. Ahead of the ECB rate setting verdict it has been position squaring that has driven markets in the European morning. Comments from the PBOC on a "potential Dollar slide" impacted USD/CHF in late Asian trading but 1.1920 propped the dip and the price drifted higher into the North American open.
Dealers look to EUR/USD for the next direction of USD/CHF while EUR/CHF will also cast an eye as the cross remains perilously close to a break above 1.59. Dealers note a 1.5925 expiry at the NY cut at 15:00 GMT that should weigh on any post-ECB Euro strength. Selling into strength remains preferred in the medium-term.
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