(25 APRIL 2018)DAILY MARKET BRIEF 2:Swiss commercial balance slackening amid weaker swissie

Known for its strong trade balance surplus, Switzerland is giving signs of deceleration for Q1, though Swiss watch exports continues its expansion for five consecutive months, valued at 4.80% (CHF 1.67 billion), largely above 6-year average of -0.50% (due to mid-2015 – 2016 export decrease). Impeded by a strong rise of imports in Q1 of 4.10% (prior: 4.80%), essentially caused by chemicals and pharmaceuticals (+14.70% for Q1), March trade balance remains at three-and-a-half years low (CHF 1.77 billion, 6-year average: CHF 2.60 billion) as the cost of imports is beginning to be felt due to convergence towards USD/CHF parity and EUR/CHF at 1.20 since the beginning of Q3 2017.

Since Swiss National Bank tone towards swissie valuation is being that it is highly valued (to distinguish with previous “overvalued” statement) while maintaining a dovish view on the national economy, there is no reason to expect any EUR/CHF massive changes above or below 1.20 for the moment.

USD/CHF strong rise since March 2018 (+4.26%) continues, recovering from 0.9188 low (16/02/2018) and approaching 0.99. The pair approaches the 0.9830 range in the short-term.

By Vincent Mivelaz