Sunshine Before the Storm?
Today’s Spotlight Market
The Swiss economy grew twice as quickly as traders expected in the fourth quarter last year, bolstered by strong exports. Will this be enough to stop the Swiss Franc’s recent slide? The currency spiked last month after the Swiss central bank announced it would remove the 1.20 upper limit on the currency. Since then, the Franc has been steadily declining, as investors’ interest has waned.
Fundamentals
The positive GDP figure may not be as positive as it appears on the surface. The Swiss economy grew 0.6% versus analyst estimates of 0.3%. However, the economy was bolstered by strong export demand, which could deteriorate with a stronger currency. Exports grew 4.1% in 2014 after falling 0.1% the prior year. Furthermore, other areas of the Swiss economy performed much worse than exporters.? Despite this, economists do not expect the Swiss economy to slip into a deep recession. If the economy even slips into recession that is.? Many observers do not expect the Swiss economy to reach recessionary levels.? Forecasters are expecting the Swiss economy to grow at just under 1 % in 2015.? It is beginning to look like the Swiss National Bank let the Franc float at the right time, as pressure is taking its toll on the currency, making it fall naturally.? There is momentum behind the idea that the SNB will cut interest rates, suggesting that the Franc could be trading too high versus the Euro and US Dollar.??? ?
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the March Swiss Franc giving back more than half of the gains that were made by the January price spike.? Prices are now trading below the 1.05 level and is approaching pre-spike price levels.? Prices are extremely oversold at the moment, which may result in consolidation in prices in the near-term.
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