SNB Confirms EURCHF Floor, Another Bernanke Testimony

Juncker: Greece cannot be forced out of EMU; German industrial production dropped; French trade deficit widened; Greek auction solid; SNB's Jordan reconfirmed EURCHF floor. Market turns to Canadian building permits and Bernanke's testimony. Latest Premium Intermarket Insights are in progress. AUDUSD trades were stopped out after the RBAs unexpected decision to hold rates.

The greenback recovered previous losses and trades unchanged since London open. European equities are losing about 0.5% and CAD is the relative strength loser.

Sentiment improved after Eurogroup's head J. C. Juncker said that Greece cannot be forced out of the Eurozone and that even in case of an exit, other countries would have to invest unimaginable sums of money. This view corresponds to chancellor Merkel's comment that Greek default is unacceptable.

USD started to gain after German industrial production dropped -2.9% in December m/m from previous unchanged print (0.9% from 4.4% y/y) which was significantly below market expectations. The only other report today was French trade deficit that widened to EUR -5 bln in December from EUR -4.1 bln.

Greece was able to sell EUR 812.5 M in 6 month bills today (target EUR 625 M). The average yield was marginally lower at 4.86% from 4.9% and cover was 2.72 from 2.8. A solid result considering the ongoing, never ending negotiations and the current 24 hour strike over new austerity.

EURCHF moved higher ahead of SNB's T. J. Jordan speech at the Swiss-American chamber of commerce where he repeated that the SNB will enforce EURCHF floor with utmost determination and will not tolerate floor's breach. He also reiterated projections that the Swiss economy will slow considerably in 2012. Surprisingly, EURCHF started to lose again after his comments.

ECB deposits declined slightly on Monday to EUR 503.38 bln.

The NY session brings Canadian building permits due at 8:30 am ET that are expected higher at 0.2% in December from previous -3.6% followed at 10:00 am by US IBD TIPP economic optimism index that is seen at 48.1 from 47.5.

The key event will be Fed chairman Bernanke's testimony on economic outlook before the budget committee in Washington DC. The testimony starts at 10:00 am and is followed by Q&A session that often causes more volatility than the speech itself.

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Parik Urban