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USDCHF Softer As Swiss Trade Surplus Increases

James Boston
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USDCHF Softer As Swiss Trade Surplus Increases

Switzerland’s trade surplus widened during the month of September according to figures just released by the country’s Federal Customs Administration. The latest measurement reveals a monthly balance of CHF 2.452Bn compared with the August reading of CHF 1.331Bn, market analysts were nonetheless disappointed as an expectation of CHF 2.646Bn had been tabled, despite this the Swiss Franc initially managed some moderate gains on the back of the news. Exports for the month of September were announced as CHF 17.523Bn, up significantly on the August figure of CHF 14.891Bn. Imports also picked up, albeit more moderately, from CHF 13.560Bn in August to CHF 15.070Bn last month.

Despite the obvious pick up in trade last month the Swiss authorities have pointed towards slowing growth in Europe, particularly in Germany, as the reason for a recent cut in Swiss GDP forecasts. Lacklustre Eurozone activity combined with falling demand in it’s main export market has prompted the Swiss government to reduce it’s domestic growth forecasts for the second time this year. 2014 GDP expansion is now being projected as just 1.8% compared to the previous forecast of 2.0% while next years predicted figure has been reduced from 2.6% to 2.4%.

A deterioration in trade with the Eurozone was previously cited by the Swiss authorities as the primary reason behind the 0.2% GDP growth level experienced during the second quarter of this year. Today’s trade figures however suggest that this may not be such a viable explanatory factor should the Q3 GDP number come in below expectation. A fall in the value of the Euro, such as we have seen over the past couple of months, would normally reduce imports into the Eurozone, the Swiss National Bank (SNB) however is ensuring that the Euro cannot deteriorate in value against the Swiss Franc, this gives Swiss exporters a slight edge on trade with Eurozone countries.

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