Talking Points:
- Switzerland’s 1Q QoQ GDP at 0.1% vs 0.3% expected
- 1Q year-on-year GDP at 0.7% vs 0.9% expected
- The Swiss Franc saw a slight negative response versus other majors on the news
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According to estimates released today by the Swiss State Secretariat for Economic Affairs (SECO), Switzerland’s Gross Domestic Product (GDP) missed expectations.
The QoQ figure printed 0.1%, below the 0.3% quarterly growth expected by economists, and below the prior quarter in which the economy grew 0.4%.
The year-on-year change in GDP came below expectations as well; the report showed the economy grew at 0.7%, below the expected reading of 0.9%, but above the prior revised 0.3% print.
Looking into the report, SECO said that the figures were underpinned by consumption expenditure from private households and investments in construction and equipment but curbed slightly by government consumption.
The SNB will hold its rate decision on June 16. The central bank’s deposit rate is already set at negative -0.75% after keeping policy unchanged at the March meeting.
Action by the central bank appears to be widely determined by the ECB decisions in an attempt to keep the EUR/CHF exchange rate in check, as Franc strength could potentially burden on the Swiss economy due to the trading relations between Switzerland and the Euro-Zone. The SNB continues to view the Swiss Franc as significantly overvalued.
Taking this into consideration, the miss to GDP expectations today appear to have had only a slight negative impact on the market, perhaps due to the limited influence the numbers have on the upcoming SNB monetary policy decision, since the ECB seem to be in wait-and-see mode, as they monitor stimulus measures announced in March.
The DailyFX Speculative Sentiment Index (SSI) is showing that about 59.9% of traders are long the USD/CHF at the time of writing.
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USD/CHF 5-Minute Chart: June 1, 2016
--- Written by Oded Shimoni, DailyFX Research
To contact Oded Shimoni, e-mail oshimoni@DailyFX.com
