EUR/CHF Rally Ends after Jump in Swiss PPI

The Euro has become the perfect currency for those who like to trade ranges and the worst for those who like action. For the past month, the currency pair has remained contained within a 300 pip trading range.

Economic data has been mixed, but comments from ECB officials suggest that the central bank is still on track to raise interest rates. German producer prices were stronger than expected in the month of May, but Italian industrial orders and Eurozone construction output were weaker. Interestingly enough, the bigger surprise in data and currency reaction was the Swiss Franc. Swiss producer prices jumped 0.9 percent in May, bringing the annualized pace of growth up from 2.6 percent to 2.8 percent. The market was actually looking for a slowdown in growth, so the surprise certainly brings inflation fears back to the forefront. This reinforces the Swiss National Bank?s need to raise interest rates again this year which should put a cap to the impressive rally in EUR/CHF. The currency pair hit a 9 year high yesterday.