Euro Rebounds on Broad Dollar Weakness; Swiss KoF Expected to be Strong

On a day with big moves in all of the financial markets, the EUR/USD was left out of the action. The meager 0.14 percent or 20 pip rally in the currency pair suggests that even though traders are bearish dollars, they are not all that bullish Euros either. Business sentiment in Germany is deteriorating with the IFO survey dropping from 107 to 106.4 in July. This past week, we have seen plenty of evidence that the strong Euro is having a negative impact on the Eurozone economy.

However for the time being, the “negative impact” has not become severe enough to keep ECB members from enjoying their month long holidays. The rise in money supply indicates that inflation is still a problem, which means that the central bank can use a strong Euro to reduce inflationary pressures. Meanwhile Switzerland will be releasing its leading indicators report tomorrow. The economy has performed well over the past month thanks to the weakness of the Swiss franc. We expect the release to continue to reflect the country?s solid growth prospects.