Europe Morning Forex Update

Swiss PMI yesterday came out firmer than expected at 65.1, well above the 63.7 consensus while this morning July CPI came out marginally weaker than expected at 1.4%y/y. We continue to see downside risk for EURCHF, both given ongoing geopolitical events and the prospect for fairly neutral comments from ECB President Trichet following today's likely rate hike.

More importance will be today's BoE meeting. Though the consensus is for no change, a surprise early rate hike by the MPC would result in the RBA, most likely the ECB today and the BoE all raising rates in a week when uncertainty over the Fed's intentions remains high.

This would be detrimental for the US dollar against the majors.