EUR/CHF Forecast Dec. 14, 2011, Fundamental Analysis

The pair was mainly stable on Tuesday as the euro remains fragile and the market is still holding still ahead of more inflation figures and the SNB decision.

Investors are just waiting for the final straw to drag the pair higher on expected SNB action especially after the Swiss government cut its growth forecasts for next year to 0.5% from 0.9% due to the worsening outlook for the European economy. Nevertheless, the expectations are not for a very deep downturn as far as the dent crisis does not worsen.

The data come ahead of more inflation figures on Wednesday that will be the last indicator ahead of the SNB decision on Thursday where growing deflation threats will affect the franc and bias trading more to the upside as investors will increase their bets on action from the SNB.

Switzerland will start the day at 08:15 GMT with the Producer & Import Prices for November which is expected to add more fears over the deflation pressures in the nation. The index is expected with 0.3% drop on the month following 0.2% decline and on the year to fall 1.9% after 1.8% drop the previous month.

The euro area will release the Industrial Production for October at 10:00 GMT with expectations for a slight 0.3% drop on the month after 2.0% drop.