The Euro finally broke out and hit a 2 week high today despite a weaker than expected German IFO report. Business sentiment deteriorated in the month of June, which is in line with the softer analyst sentiment reported earlier this month.
The combination of weaker retail sales, a strong currency and higher interest rates has made it much more difficult to do business than prior months. The strength of the Euro today came from broad dollar weakness as well as extremely hawkish comments from ECB President Trichet, who basically confirmed that higher rates are to come. The Swiss franc staged an exceptionally strong move today thanks to hawkish comments from SNB President Roth. He was optimistic about growth and employment, which paves the way for further rate hikes this year.