The euro exchange rate is 0.688% lower against the US dollar on the day with EUR USD at 1.4283. The euro exchange rate is 0.542% lower against the British Pound, EUR GBP is at 0.8806. Greece’s parliamentary auditors declared that Greece’s debt dynamics are out of control, that the primary deficit is still widening, and that the debt-to-GDP ratio is unlikely to stabilise in 2012. It concluded that all this casts doubt on Greece’s mid-term fiscal plan, which we note was only narrowly approved by the Greek parliament two months ago. The timing of these remarks is particularly sensitive given the IMF is currently assessing progress on fiscal consolidation as part of its regular quarterly inspections. A German government spokesman said that the cabinet has approved a framework for a draft law on expanding the EFSF. A full parliamentary vote on the proposals is not expected until the end of September. The Italian Treasury announced it has already covered more that 70% of its planned issuance for 2011, out of a planned total of EUR 430 bn. Swiss Franc Swiss GDP was in line with expectations at +0.4% q/q and +2.3% y/y. For the second Wednesday in a row, the SNB made no policy announcement regarding CHF strength. The SNB’s sight deposit target of CHF 200 bn has likely been reached by now and, given the silence from the SNB, investors might now try to test the SNB’s resolve. Two weeks ago the Swiss government announced it would make CHF2 bn available to help support sectors of the economy that have been adversely affected by the strong Swiss Franc. On Wednesday, it announced the first tranche of this money would be released, amounting to CHF 0.87 bn. This fiscal support is to be targeted specifically at the tourism sector, and at preserving jobs more generally. Crucially, these measures are not designed to affect the value of the CHF itself − just to deal with the consequences.

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