Into European trading and the drop in the Dollar index and the talk of reserve manager US unit sales put the downside in USD/CHF in view ahead of the key Bernanke testimony (15:00 GMT). Spot was sold back from just shy of 1.2480 to 1.2416 in the move.
Bids into 1.2400 are now eyed despite the fresh historic high in EUR/CHF (1.6280), while the previous support turned resistance at 1.2445 is now seen as the initial hurdle for any correction. In other news, dealers cite the renewed assault on the topside in EUR/CHF as a product of the news that the EU has called for the abolition of the Swiss corporate tax haven. A Swiss privateer today noted in their research that 1.65 may be "the line in the sand as far as the SNB is concerned".
They tip an aggressive 50bp rate hike from Roth if such rates print ahead of the mid-March meeting. This is above the 25bps currently priced in. The name in question is also looking for a further 75bps to be added to Swiss rates into 2008. Looking ahead, Swiss inflation may be near Zero but economists still look to the domestic retail sales data due tomorrow (Some eye a 2.5% drop).
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