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Franc Rallies as Swiss Economy Sees Unexpected Growth in Q1

Franc Rallies as Swiss Economy Sees Unexpected Growth in Q1

Benjamin Spier, Technical Strategist

THE TAKEAWAY: Swiss GDP unexpectedly grows 0.7% in Q1 -> Recent indicators point to further economic expansion -> Franc rallies against the dollar

The Swiss economy unexpectedly grew in the first quarter of 2012. The gross domestic product came in 0.7% higher than the previous quarter, as opposed to staying at the same level as was expected by analysts. Swiss GDP grew 2.0% when compared to the first quarter of the previous year according to the State Secretariat for Economic Affairs; and the GDP for Q4 of 2011 was revised higher to a 0.5% growth during the quarter.

The Swiss economic growth for Q1 was the strongest since Q3 of 2010. Economic indicators that were released over the past few days point to continued growth in the Swiss economy, but pressures are also mounting from the Eurozone’s debt crisis.

The Swiss Central Bank is worried by the strengthening of the franc and they are therefore maintaining a 1.2000 floor in EUR/CHF.

Franc_Rallies_as_Swiss_Economy_Sees_Unexpected_Growth_in_Q1_body_usdchf.png, Franc Rallies as Swiss Economy Sees Unexpected Growth in Q1

The Swiss franc slightly rose against the US dollar following the release, continuing an earlier day fall in USD/CHF. EUR/CHF continues to trade above the 1.2000 floor.

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