Into European trading and the divergent paths of EUR/CHF and USD/CHF were in focus. EUR/CHF broke 1.6250 (1.6257 the high) to erase exotic options. This buying helped force USD/CHF to bounce off 1.2513. Looking ahead, the latest Swiss leading indicator numbers are due for release tomorrow (Wednesday at 10:30 GMT), the Kof is expected to slip further into the New Year and any such slippage will keep the pressure on the Swiss Franc.
A 1.51 headline in January, from December's figure of 1.60, is seen as the consensus, however, the recent downward trend is set to reverse soon amid expectations Swiss growth will resume again in 2H 2007 after the cooling that is expected to be witnessed in 1H. Following this, SNB President, Roth, is due to speak on Thursday (after 14:00 GMT).
There is a view in the local market that his comments could carry another warning and thus garner more support for the CHF. Such verbal interventions are yet to deter many traders but this coupled with an increase in hawkish rhetoric could give EUR/CHF longs a thing or two to ponder.
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