(24 SEPTEMBER 2018)DAILY MARKET BRIEF 2:Swiss trade surplus to decline

Although Switzerland’s balance of payments increased CHF 2 billion to CHF 22 billion in Q2, we expect the trend to reverse in Q3, as the US-China trade war weighs on the franc, which has appreciated against the Euro and US dollar by -2% and -2.80% since the beginning of June. Further trade uncertainties will push the CHF higher, which disadvantages Swiss exporters.

The Swiss economy grew at 3.20% in Q2, above the historical pace of 1.90%) and the Swiss National Bank’s forecast of 2%. The country’s financial account continues to drop, with both assets and liabilities declining by CHF 50 billion and CHF 60 billion amid divestments from foreign companies due to US tax reforms. EUR/CHF is currently trading at 1.1280, expected to trade sideways.

By Vincent Mivelaz