FX.co ★ Fundamental Analysis 07 September 2011

ECB President Trichet called on euro zone states immediately pass the strengthening of the rescue fund to fight the debt crisis. Also stressed that the euro area needs a series of economic reforms and structural improve productivity, increase growth and boost employment.

What has been happening lately is that downward movement of euro sovereign rebalancing flows appear, which eventually mitigate the fall of the single currency, the euro is needed is a catalyst strong enough to get him out of his range with the dollar, leading the euro to fall against most currencies.

The Swiss franc weakened against the dollar and euro after the Swiss Central Bank (BNS) declared that it would buy unlimited amounts of currency in the country to curb the strength of the currency and lower its value to a target of 1.20 francs against the euro. The EURCHF reached a price of 1.21 and this also caused the rise of the dollar against the franc and the USDCHF was at 0.8579 francs.

On the other hand the price of gold reaching back to 1920 dollars an ounce, rising expectations that the U.S. re-launch a QE and the aforementioned European debt fears. It is quite clear that any event that generates some fear in financial markets by strengthening the gold finish, at least for the remainder of the year.