The EUR/CHF remains stable as both the euro and the franc recovered versus the dollar and the pair now lacks the appeal on the back of the wait-and-see approach from the SNB.
The market strain eased after the Spanish short term borrowing costs dropped heavily allowing the nation to exceed its upper limit selling 3.7 billion of 3-month bills at an average yield of 1.7% from 5.11% the previous auction and sold 1.92 billion of 6-month bills at an average yield of 2.4% from 5.2%.
We saw a very positive reaction for the auction despite the fact that many downplayed the move as banks pilled the bonds to benefit from the ECB facilities and gear for the three-year loans to be auctioned on Wednesday.
Holiday volatility is clearing more by day and on Wednesday we expect more volatility with the lack of heavy data as the eyes will be centered on demand for the three-year loans at the ECB window as they announce the total bids and allotted amounts which is key for the markets and a very large number might as well be shocking and could send a jitter wave that the banking sector is indeed stressed, yet already expectations are for demand to be high that might reach as much as 300-400 billion euros.
The Swiss Money Supply M3 for the year ending November is due at 08:00 GMT and likely did not change heavily from the previous 8.2%.