Swiss Annual Inflation Remains Negative for the 11th Straight Month
THE TAKEAWAY: Consumer price index unchanged in August -> 11 straight months of negative annual inflation -> Franc trading unchanged
Swiss annual inflation was negative for the eleventh consecutive month in August; however the inflation rate was higher for the second straight month at -0.5%. Monthly consumer prices were stagnant in August, lower than expectations for a 0.1% increase in the consumer price index.
The prices of food and non-alcoholic beverages fell 0.7% in August, while clothing and shoe prices fell 1%. The prices of energy products were 3.1% higher in Switzerland in August, according to the Federal Statistics Office.
The Euro has tracked closely with the Franc in part because the SNB maintains a floor on the EURCHF exchange rate at 1.20.The pair has traded within a narrow range near the cutoff level for some time as Eurozone crisis fears weigh on the Euro and the SNB steps in to counteract downside pressure. The floor was put in place to help countervail deflationary pressure and prevent a sharp rise in the cost of Swiss exports for foreign buyers.
The Swiss Franc did not significantly react to the lower than expected consumer prices. USDCHF recently set a new nine-month high slightly below parity before retracing back below 0.9600. A three month low at 0.9424 could provide support.
USDCHF 15-minute: September 5, 2012
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