Following the rise of the USD against the Yen, caused by the decision of the Bank of Japan to introduce negative interest rates on deposits of the commercial banks from с 0.1% to -0.1%, the USD has grown against the other safe haven currencies, such as gold and Swiss franc.
The Swiss franc has weakened despite positive data on KOF leading indicator, which became known at the beginning of European session. The index in January was above the forecast of 96.0 and the revised December figure of 96.8.
Since the beginning of the month the pair USD/CHF has been in the uptrend, increasing by 170 points.

It became known earlier this week that foreign trade balance of Switzerland has reduced by 20% in December versus the value of the previous month. It should be noted that the decrease affected both imports and exports.
According to the data released last week, economic sentiment index ZEW, (which evaluates business climate, situation in the labour market and current economic state in the country), fell to -3.0 in January against 16.6 in December.
Producer price index and imports also decreased (-0.4% in December versus the forecast of -0.2% and the rise of 0.4% in November).

It seems that general state of Swiss economy is deteriorating.
After the decision, adopted last January, to unpeg the rate Swiss franc to Euro, the price of Swiss products and services in Euro has grown in price by 20%. This fact has affected both Swiss producers and resorts.
According to the Customs administration of Switzerland, exports in 2015 fell by 3%, supply to Eurozone, which accounts for almost half of Swiss exports, has dropped by 7.3%.

The volume of exports in China also fell due to devaluation of the Yuan in June and the rise in Swiss Franc.

According to Swiss National Bank, national currency rate is high and Swiss Franc is overvalued, which impedes the development of Swiss economic sector that is largely export-oriented.

If the tendency of the decline in positive trade balance, retail sales, and producer price continues, Swiss National bank may proceed with the further easing of monetary policy in the country, which will lead to interventions with the sale of franc especially in the pair with Euro in order to weaken Swiss franc. This fact can trigger further strengthening in the pair USD/CHF in the medium-term, despite falling expectations of market participants in terms of the increase of the interest rate in the USA in March. Next meeting of Swiss National bank devoted to the monetary policy in the country is planned for 17 March.

Today, the US news block will be released from 15:30 to 17:00 (GMT+2). The most important data will be as follows: price index of domestic acquisition for Q4 (forecast of the rise of 0.8% against 1.3% in Q3), and annual GDP for Q4 (it is expected that the index will rise by 0.8% versus the figure of 2.0% in Q3). If the data turn out to be above the forecast the USD will increase in the pair USD/CHF and in the market.

Materials published on this page are provided by LiteForex for informational purposes only and should not be construed as investment advice or advice for the purposes of 2004/39/EC Directive. In addition, these materials have not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the further distribution of investment research.

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