All attention of the market participants is focused on referendum in the UK, leaving other macro-economic data unnoticed.
According to the data released earlier this week, Swiss trade balance has increased in May, despite the rise in CHF.
Exports in Switzerland amounted to 17.252 billion francs, increasing by +1.4% on annual basis. Foreign trade in Switzerland reached 3.786 billion francs in May against the forecast of 2.880 billion and the value of 2.508 billion in April.
According to the data released yesterday, ZEW index of economic expectations rose by 1.9 points, up to 19.4 in June. At t he same time many economists believe that GDP growth in Switzerland will not exceed 1%-1.5% in the next three-five years.
The main fundamental driver of the financial market is still a referendum in the UK. Uncertainty about the outcome of the referendum forces many investors to withdraw their funds and deposit them in a secure safe-haven assets, such as the Yen, gold and Franc, although the franc’s role as a safe-haven currency has lowered.
Significant rise in franc raises concern of the leaders of Swiss National Bank, who traditionally believe that franc is overvalued.
Since the opening of trades today, franc and the pair USD/CHF continues to rise.
In case of the exit of the UK from the EU, the funds in the financial markets will be redistributed and investors will deposit to safe-haven assets, such as the Yen, gold and Franc.
In case of significant inflow of capital to Switzerland, the Central Bank of the country may carry out intervention to the currency market and in addition may have to lower the deposit rate from the current 0.75% in order to stabilize the franc and prevent its excessive rise.
The pair USD/CHF continues to decline, although the head of the US Fed Janet Yellen has actually confirmed intentions to increase interest rates in the country in her speech this week.
As stated by D. Yellen, real inflation in the US is increasing, despite expectations of the decline, the US economy is in good condition economic growth is likely to continue.
After the announcement of the outcome of referendum in the UK and stabilization of the financial markets, investors’ attention will again shift to the possible increase in the interest rates in the US, which will strengthen the USD.