Disappointment in G7 May Be Built In

The Swiss economy has generally outperformed the Japanese economy. The Swiss current account surplus stands at almost 14% of GDP; compare that to with Japan's, which is near 3.5%.

On a knee-jerk spike in Asia early on Sunday, Johnny-come-lately types might initially sell the yen. This could lift the dollar toward JPY122.00 and the euro toward its recent high near JPY158.60, but I suspect the greater risk lies in the other direction. If this analysis is right, the yen can initially recover toward the upper end of its recent range. This would put the dollar nearer JPY120 and the euro near JPY155.30.

A similar scenario for the Swiss franc would warn of knee-jerk risk lower, with the euro extending recent gains toward CHF1.6300 and the dollar to around CHF1.2550. I suspect the bigger risk on a "sell the rumor, buy the fact" scenario would be for the dollar to retest the CHF1.2375 area and the euro to return to CHF1.6150.