The Swiss franc is showing limited movement on Tuesday. USD/CHF is trading at 0.8507, down 0.11{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} on the day.
Swiss CPI drops to 1.1{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38}
Swiss inflation declined to 1.1{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} y/y in August, down from 1.3{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} in the previous two months and below the market estimate of 1.2{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38}. This was the lowest level since March, as prices for food, clothing and transport all decelerated. Monthly, CPI was flat, up from -0.2{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} in July and shy of the market estimate of 0.1{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38}. Core CPI was unchanged at 1.1{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} y/y.
Inflation remains within the Swiss National Bank’s target of between 0 and 2{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38}, as the sharp appreciation in the Swiss franc and dampened inflation and allowed the central bank to cut rates twice this year, bringing the cash rate to 1.25{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38}. The strong upside pressure on the franc could prompt the SNB to cut rates by a quarter-point at its meeting on Sept. 26.
Swiss GDP surprised on the upside with a strong gain of 1.8{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} y/y in the second quarter. This was much stronger than the 0.6{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} gain in Q1 and beat the forecast of 0.9{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38}. Monthly, the economy expanded by 0.7{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38}, up from 0.5{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} and above the forecast of 0.5{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38}. Manufacturing and services both improved in the second quarter, helping to drive GDP higher.
US manufacturing woes continue
In the US, two manufacturing PMIs pointed to contraction, with readings below 50. The ISM Manufacturing PMI rose slightly to 47.2, up from 46.8 but shy of the market estimate of 47.5. Demand remains weak and the manufacturing sector has been in contraction mode for most of the past 18 months. The S&P Manufacturing PMI dropped to 47.9 in August, down from 49.6 in July and its first decrease in seven months.
USD/CHF Technical
- USD/CHF is testing support at 0.8513. There is weak support at 0.8489
- 0.8542 and 0.8566 are the next resistance lines
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including Investing.com, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.
