CHF Intraday Analysis: Swiss Economy Slowing Down

NEW YORK (Forex News Now) – Intraday analysis of the Swiss franc reveals that the Swiss economy appears to be slowing down according to economic data released today.

An investor sentiment survey from ZEW – the Centre for European Economic Research – suggests that investor sentiment in the Swiss economy has dropped down -27.5 in the month of October, from a previous rating of -5.1 in September.

Further, approximately a third of the experts surveyed by ZEW expect the Swiss economic momentum seen so far in 2010 to decline.

This coincides with other economic data released, which reports that exports rose 6% in the month of September from September, 2009 – down from 8.6% year-on-year growth in August.

Fabian Heller, an economist with Credit Suisse, commented on the data, saying, “We’ve seen a slowdown (in exports) and we expect this to continue in the next months. This is a weaker trend of recovery, (but) the trend as a whole will remain in positive territory.

Swiss National Bank

The Swiss National Bank also contributed to intraday analysis, claiming that the Swiss economy’s growth rate – 2.5% so far in 2010 – should decline significantly in 2011 due to strong currency and a struggling global economy as a whole.

The Swiss franc has been seen by investors as a safe haven currency for most of 2009 and 2010, based on a fundamentally strong economy relative to other struggling economies in the euro zone.  This year alone has seen CHF gain record highs against both the euro and the dollar, supported in part by strong domestic consumption and resilience against the same factors that have so far plagued Switzerland’s European neighbors.

In response to the new economic data, the Swiss franc fell 0.3% against the dollar, to 0.965, and also dropped 0.39% against the euro, to 1.3482.

Both marks are down from their 52-week highs – 0.95 for the dollar and 1.28 for the euro – but are still well above the lows of 1.17 and 1.52, respectively.

The robust performance of the euro since May of this year – coupled with a slowing appetite for Swiss goods in the global economy due to larger macroeconomic pressures – could point to an erosion in the reputation of the Swiss franc as a safe haven, especially if the euro continues to gain and the dollar picks up following quantitative easing in November.

For the short-term, though, the Swiss franc should continue to exhibit strength against its main two competitors.