According to previously submitted data for the week, consumer prices fell 0.4% in July compared with the previous month and by 0.2% compared with the same period last year. Real retail sales in Switzerland in July fell by 3.9% in annual terms.
The labor market in this country is in good condition, and the unemployment rate remained stable near the level of 3.3% (this data for July were presented on Tuesday), remaining one of the lowest in Europe and worldwide.
National Bank of Switzerland is traditionally in favor of a low exchange rate of the Swiss franc, considering it too high. At the same time the SNB reserves the right, if necessary, to intervene in trading on the foreign exchange market with franc sales to bring down the excessive demand for it.
On carrying out foreign exchange intervention the SNB, while never notify, either before or after the intervention carried out. It certainly hinders market participants from aggressive purchases of the franc.
Despite the strong labor market data in the United States, published last Friday, weak data on GDP and productivity in the US in Q2 significantly reduce the likelihood of higher interest rates in the US in the coming months.
Thus, according to futures on interest rates, the probability of a rate hike in September is 12%, against 15% the previous day and 18% on Friday.
More than likely seems an increase in US interest rates in December by 0.25%.
On the other hand, there is a steady trend of monetary easing by other major world central banks. So, yesterday the RBNZ cut its stake in New Zealand by 0.25% to 2.0% and signaled the possibility of further easing of monetary policy.
It is likely that before the end of August the strong position of the US dollar in the foreign exchange market, including in the pair USD / CHF will remain, despite the low probability of increasing rates in the US in September. And when you receive a positive US macroeconomic data, long positions in the US dollar will gain momentum towards the end of the year.