Forex traders look forward to inflation data

Today newspapers and TV channels continue to discuss the possibility of a meltdown in US financial markets. Even though the US current account deficit narrowed sharply at the end of 2006 (there was a deficit of $195.8 billion for Q4, versus a revised $229.4 billion shortfall in Q3, which is about $5 billion narrower than has been expected for Q4), that may not do much to help the USD. Technically, the US dollar is still struggling to hang on, but current USD sentiment is quite bearish in the forex market. Forex traders are now...

eagerly awaiting inflation data on Thursday and Friday.

The state of the US sub-prime lending sector continues to steal the limelight.

The OPEC voiced its concerns today in Vienna about the impact of US housing market woes on global economy. "There is very much concern about whether problems in the US housing market become more widespread," an official said. "This issue with the US subprime market could get bigger and have a bigger macroeconomic impact."

USD/CHF bounced around 60 pips off expected support around 1.2140 today, and looks quite vulnerable again at the moment. Nearest resistance is around 1.2200, then 1.2240, then 1.2260, then 1.2280-1.2315. If it breaks successfully below 1.2140, it may target 1.2085-1.2110, then 1.2060, then 1.2030.

Note that the Swiss National Bank is expected to raise rates tomorrow.