Swiss June CPI rose 0.2% m/m, which kept the annual rate stable at -1.0% y/y for a second consecutive month. This was in line with the Reuters median for the y/y rate. Core inflation also held steady y/y, at 0.8%, hence remaining in the positive territory. We see the risk for headline CPI to to be negative through most of 2009 before rising in 2010.
CHF is range bound in quiet trade, with EUR-CHF chopping around just under the 1.5200 level. Swiss CPI data did not impact price action, with the annual rate stable at -1.0% y/y after a 0.2% m/m rise in June. Core inflation held steady at 0.8% y/y, but we still see risk for a negative headline as the year progresses, before rising in 2010. EUR-CHF price action has been influenced by the dollar pairings since Thursday’s afternoon session. The fallout in EUR-USD after the ECB and U.S. NFP data forced EUR-CHF down to 1.5161 lows. SNB’s Jordans warned over more potential FX intervention yesterday, but heavy position adjustment and an uptick in risk aversion was the dominate theme ahead of the weekend. From here, further EUR-CHF losses are likely to be contained, while USD-CHF should remain supported on dips as the dollar benefits from a more restrictive risk environment.