European session: The Swiss franc strengthened for the first time in four days

The Swiss franc strengthened for the first time in four days against the euro after the central bank raised its growth forecast at a policy meeting. The currency climbed from a seven-week low against the dollar as the Swiss National Bank predicted the economy will expand 1 percent this year, twice as much as its previous estimate. Policy makers led by interim Chairman Thomas Jordan, maintained their ceiling for the currency at 1.20 francs per euro, and pledged to defend the cap with their “utmost determination.”

The SNB forecast that consumer prices will fall 0.6 percent this year, before inflation returns in 2013 with a rate of 0.3 percent, accelerating to 0.6 percent in 2014. The Zurich-based central bank kept its benchmark interest rate at zero as predicted by all  economists.

Fitch Ratings said Britain risks losing its top investment grade because of its limited ability to deal with shocks, days before Chancellor of the Exchequer George Osborne will present his annual budget. Fitch changed the outlook on Britain to “negative” from “stable,” indicating a “slightly greater” than 50 percent chance that the AAA rating will be reduced within two years, the company said in a statement in London late yesterday, citing the weak economic recovery, high debt levels and threats from Europe’s debt crisis. Osborne will meet coalition partners later this week to agree on a budget he will present on March 21.

EUR/USD: the pair holds in range $1,3035-$ 1,3070.

GBP/USD: the pair holds in range $1,5630-$ 1,5675.

USD/JPY: the pair receded from high Y84,15.

A busy US data schedule starts at 1230GMT with the Producer Price Index, weekly initial jobless claims and also the NY Fed Empire State Survey. Producer prices are expected to rise 0.5% in February after soft readings in the previous two months. After falling recently, both energy and food prices are expected to rebound in February. The core PPI is expected to rise 0.2% after the 0.4% jump in January. Initial jobless claims are expected to fall 5,000 to 357,000 in the March 10 week after rising 8,000 in the previous week. Claims have remained in a tight range in recent weeks. The NY Fed Empire State Manufacturing Index is expected to fall to a reading of 18.0 in March after jumping to a reading of 19.53 in February. This is followed at 1300GMT by the latest TICS report and then at 1345GMT by the weekly Bloomberg Comfort Index and at 1400GMT by the Philadelphia Fed index, which is expected to rise further to a reading of 11.5 in March after rising to 10.2 in February.