FX.co ★ Fundamental Analysis, August 31, 2011

The brief recovery of the euro has definitely passed, with investors worried about the debt crisis of the euro area and coating weight on the common currency. Weak demand in the auction of Italian bonds - the largest in the euro area - brought to investors concerns to the fore, with the concern that debt problems in the third largest economy in the euro area can be climbing. Adding to investor concerns stood EMU consumer sentiment which was released yesterday showed that consumer confidence in the economy was far below what analysts expected.

The U.S. dollar is also under pressure after the release of yesterday's Federal Reserve meeting minutes of the latest FOMC, which led to expectations of an additional stimulus. Both currencies fell against the Japanese yen safe-haven Japanese, being purchased mainly by Japanese exporters to settle their accounts in this, the last day of the month.

Markets remain alert this morning before any announcement of the SNB, since three of the last four Thursday at 9am CET, the central bank announced new measures to counter the strong Swiss franc. Last week was the exception to the rule, but with the prospect of deposits and to achieve the target of 200 billion for the SNB, there is clear room for a new implementation of measures.