Swiss and Euro-Zone Inflation Gauges at Record Low Levels, Forcing Tough Decisions fo

[B]Fundamental Headlines[/B]

[I]• Decline Levels Off in Manufacturing– Wall Street Journal
• Inflation Slows in Many Asian Economies – Wall Street Journal
• US tax battle weighs on UBS– Financial Times
• Bank of America CEO Scrum Begins as Lewis Revamps Management, Settles Case – Bloomberg
• Stocks Decline for First Time in Four Days; Metals, Copper Fall, Yen Gains – Bloomberg[/I]

[B]USDCHF[/B] – The Swiss Consumer Price Index came in slightly worse than expected as it fell 1.2% annually. The decline in prices was largely attributed to the drop in energy prices, as the price of oil has fallen 40% from a year ago. Core inflation continues to rise though, increasing 0.9% after a 0.8% rise in June. The SNB intervened in March to prevent appreciation of the Swiss Franc, and has driven up the prices of imported products. Outlook for CPI continues to be negative into early 2010 which could lead to more SNB intervention.

[B]EURUSD[/B] – The Euro-Zone Producer Price Index came in as expected at -6.6% annually, which was the largest decline in at least 28 years, also as a result of falling oil prices. PPI was marginally better than expected monthly, rising 0.3%. ECB’s Trichet was optimistic for future inflation rates though, with the expectation that inflation could return to its target rate of 2% by mid-2010. The IMF forecasts that the Euro Region will experience 0.3% growth in 2010 which could increase upside risks to inflation and force the central bank to tighten before then. Discuss the topic and your trade ideas in the EUR/USD Forum.