{"id":148498,"date":"2019-05-27T15:15:54","date_gmt":"2019-05-27T19:15:54","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=148498"},"modified":"2019-05-27T09:14:23","modified_gmt":"2019-05-27T13:14:23","slug":"what-to-look-for-in-swiss-q1-gdp","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/05\/what-to-look-for-in-swiss-q1-gdp\/","title":{"rendered":"What To Look For In Swiss Q1 GDP"},"content":{"rendered":"
May 27, 2019<\/div>
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By <\/strong>Orbex<\/strong><\/a><\/p>\n

The CHF is in for a busy week, with the most important figures coming out tomorrow before European traders get to their desks.<\/p>\n

Switzerland is one of the last major countries to report their GDP. But, it doesn\u2019t mean it won\u2019t provide some volatility for the markets. Last time around, the Swiss narrowly avoided a technical recession. However, the outlook isn\u2019t so good this time around.<\/p>\n

What We are Looking For<\/strong><\/h2>\n

Tomorrow morning there are two major events. At 07:45 CET (01:45 EST), we have the GDP figures. Then, just fifteen minutes later we have the trade balance. Both have a habit of propelling the Swissie in a new direction. The fact that they are both coming in so close to each other right before the equity market open in Europe means it\u2019d be a good idea to keep a close watch on them.<\/p>\n

Later in the week, we have the KOF economic barometer. It is expected to keep its sideways trajectory in contraction territory around 95. While this isn\u2019t good, it seems to have stopped the decline that it was registering all year. But, if we get some disappointment from the GDP and trade numbers, that might change. The week closes out with retail sales. The data is expected to remain in negative territory also.<\/p>\n

The Main Issue<\/strong><\/h2>\n

There isn\u2019t a solid consensus on what to expect from the Swiss GDP. While there is a preponderance of analysts projecting a negative result, there are still quite a few who have a more upbeat outlook.\u00a0Officially, the expectation is for Q1 Swiss GDP to contract by 0.6%.\u00a0<\/strong>However, this is the bottom of a range offered by analysts which go as high as +0.2%.<\/p>

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With such a wide range,\u00a0we could see some extra market volatility<\/strong>\u00a0if the result comes within it. It\u2019s likely that a result above 0.2% would be interpreted as strengthening for the CHF. We could see some extended weakness in the Swiss currency if the GDP comes in below -0.6%.<\/p>\n

Why the Discrepancy?<\/strong><\/h2>\n

The issue comes down to trade.\u00a0Last quarter\u2019s growth was driven<\/a>\u00a0almost entirely by trade.\u00a0Optimistic analysts are pointing to Switzerland\u2019s above average trade surplus during the first three months of the year.\u00a0<\/strong>The main exports have continued to perform well, as reported by Richemont, Swatch and Roche during their quarterly earnings reports. A positive trade balance is usually seen as support for the currency.<\/p>\n

On the other hand,\u00a0the trade balance is being attributed to the slackening of imports.<\/strong>\u00a0Exports are actually underperforming. While the cash flows would be positive, the underlying economic performance might be such that the positive contribution from the trade balance isn\u2019t enough to push the GDP into positive territory.<\/p>\n

Swiss External Dependency<\/strong><\/h2>\n

The overriding problem that Switzerland has now is that the largest component of its economy is trade with other countries. Their trade is mostly with Europe, who are having economic difficulties. Switzerland\u2019s major industry, finance, has been chronically under pressure. The reason for this is due to regulatory increases, low-interest rates, and a lack of global profitability.<\/p>\n

In such a scenario, the long-term trend of the CHF seems to have more to do with safe haven interest than the underlying economic performance of the economy.\u00a0Because of Switzerland\u2019s reputation,<\/a>\u00a0their currency could remain strong despite lackluster economic news. This would be precisely because what\u2019s causing the poor economic performance is what makes their currency attractive: global geopolitical uncertainty.<\/p>\n

By <\/strong>Orbex<\/strong><\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Orbex The CHF is in for a busy week, with the most important figures coming out tomorrow before European traders get to their desks. Switzerland is one of the last major countries to report their GDP. But, it doesn\u2019t mean it won\u2019t provide some volatility for the markets. Last time around, the Swiss narrowly […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-148498","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/148498","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=148498"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/148498\/revisions"}],"predecessor-version":[{"id":148501,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/148498\/revisions\/148501"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=148498"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=148498"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=148498"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}