A report this morning that the German Bundesbank won't support using additional IMF funds for a European bailout added to the EUR's woes a day after S&P placed 15 euro zone nations on a n egative ratings watch .
S&P did not spare the AAA countries as six of the countries placed on negative credit watch hold the top rating including Germany and France. These nations could face a downgrade within the next 3-months. The report comes on the heels of the negotiations between Merkel and Sarkozy which look to have made some progress going into this week's euro zone summit . The EUR/USD has support at last Friday's post NFP low of 1.3260.
Swiss CPI will be released this morning and a contraction in the inflation rate may have traders attempting to get out in front of any future move by the SNB to weaken the CHF. Any gains in the EUR/CHF will likely be capped by the 1.25 level.
In the North American trading session we'll get an interest rate decision from the BoC which is expected to hold rates steady. The USD/CAD could test the rising trend line from the July and October lows at 1.0090 followed 0.9890 at the October low.
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