Overview
Switzerland’s unemployment rate in January rose to 4.5% from 4.4% the month prior, with economists’ expectations of 4.6%, marking its highest level since March 1998, while the seasonally adjusted rate slipped to 4.1% from 4.2% the previous month, the State secretariat for Economic Affairs in Berne announced today. Meanwhile, retail sales pushed 4.7% higher in December after diving a revised 0.1% in November on the back of holiday shopping.
Breakdown
The breakdown of the report illustrated the largest unemployment gains were amongst males, with the reading advancing to 102,673 in January from 100,077 in December.
Market Reaction
There was little reaction to the data following the release, however, looking at the daily chart, the pair recently slipped above the 200-day SMA – a level which has held as a resistance since May 2009, and now looks to expose upside towards 1.1000 in the medium term. Entry in the short term may not be appropriate as the pair is now trading at overbought levels, and is due for a bounce back this week, however, entry for a long position at Monday’s high maybe more suitable.
Forecast
Going forward, Investor’s will keep their eye on Thursday’s Consumer Price Index report as a better-than-expected reading would limit the need for further CHF selling by the central bank, which has been a policy since last year in order to help combat deflation, and is the reason why the SNB tends to take action to weaken its currency when it accelerates against the euro rather than fixing its currency. Indeed, economists predict a 0.8% annualized gain and a monthly loss of 0.4%. Meanwhile, traders are forecasting in a zero probability that the Swiss National Bank will raise rates at its next decision meeting on March 11th according to the Credit Suisse overnight rate swaps, as policy makers aim to encourage a sustainable recovery.
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Written by Michael Wright, DailyFx Research
Questions? Comments? Email me at mwright@fxcm.com
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