By FXEmpire.com
Outlook and Recommendation
The EUR/CHF continues in its own private battle against the SNB floor. The pair ended the month at 1.2011.
The Swiss franc (CHF) lost almost 7% against the USD in May, as the weight of the 1.20 EURCHF floor limited its direction. The Swiss National Bank’s policy is viewed as a credible one. Once risk aversion passes, there is likely to be renewed pressure to push the floor up to 1.25.
With a credible exchange rate floor and an accommodative fiscal stance underpinning an improvement in confidence in the Swiss economy, macroeconomic conditions appear comparatively stable. Real GDP expanded by 0.7% q/q in the first quarter, driven by gains in private and public consumption and partially offset by contractions in investment and net exports. Looking to the quarters ahead, the picture remains unclear; the KOF Leading Indicator (a composite business survey) registered another gain in May, continuing its steady improvement since the turn of the year, while the manufacturing PMI dipped to 45.4, its lowest level since mid-2009. We anticipate modest growth of under 1/2 % this year, picking up to 1 1/2 % in 2013. The consumer price index fell for a seventh straight month on a yearly basis, losing 1.0% y/y in April (the same pace as the prior month). Nevertheless, officials at the Swiss National Bank (SNB) maintain that the existing exchange rate floor of EURCHF 1.20 has diminished the deflationary risks threatening the nation’s medium-term growth outlook. Moreover, the SNB has recently voiced concern about building imbalances in domestic credit and property markets in the context of a prolonged period of very low interest rates
FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.
Central Bank Name: Swiss National Bank
Date of next meeting or last meeting: Jun 14
Current Rate: 0-0.25 % (- 0,50)
Statement highlights of last meeting: The Swiss National Bank (SNB) will continue to enforce the minimum exchange rate of CHF 1.20 per euro with the utmost determination. It is prepared to buy foreign currency in unlimited quantities for this purpose. The target range for the three-month Libor will remain unchanged at 0.00-0.25%. The SNB will continue to maintain liquidity on the money market at an exceptionally high level. Developments in the global economy are mixed. While growth in the US was surprisingly positive in the fourth quarter, GDP fell in the euro area and Japan. In Switzerland, growth has slowed significantly over the course of the past year. Added value declined in the fourth quarter in industries affected by exchange rate movements. While the high value of the Swiss franc continues to present enormous challenges to the economy, the minimum exchange rate is having an impact. It has reduced exchange rate volatility and given business leaders a better basis for planning. There are growing indications that Switzerland’s economy is stabilizing. For 2012, the SNB is now forecasting moderate growth, at close to 1%.
Historical:
Highest: 1.5193 CHF on Oct 10, 2009.
Average: 1.3271 CHF over this period.
Lowest: 1.0083 CHF on Aug 9, 2011.
Economic events for the month of June affecting EUR, CHF, GBP and USD
|
Time |
Cur. |
Event |
Forecast |
Previous |
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|
Friday, June 01 |
||||||||
|
12:30 |
USD |
8.1% |
8.1% |
|||||
|
12:30 |
USD |
150K |
115K |
|||||
|
14:00 |
USD |
53.9 |
54.8 |
|||||
|
Wednesday, June 06 |
||||||||
|
11:45 |
EUR |
1.00% |
1.00% |
|||||
|
Thursday, June 07 |
||||||||
|
11:00 |
GBP |
0.50% |
||||||
|
Thursday, June 14 |
||||||||
|
07:30 |
CHF |
0.25% |
||||||
|
Wednesday, June 20 |
||||||||
|
08:30 |
GBP |
-13.7K |
||||||
|
Thursday, June 21 |
||||||||
|
08:30 |
GBP |
-1.1% |
||||||
|
08:30 |
GBP |
-2.3% |
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Click here for updated EUR/CHF News.
Originally posted here
