KOF Indicator Predicts a Rebound in Swiss Growth
THE TAKEAWAY: KOF Swiss Leading indicator beats expectations and sets new yearly high -> Indicator predicts a return to Swiss -> Franc trading steady
The Swiss GDP will continue to grow over the next eight months according to the KOF Institute’s Swiss leading indicator. The economic indicator set a new yearly high at 1.67 in September, beating expectations for the indicator to fall to 1.50 from August’s revised 1.59 result.
The KOF leading economic indicator has increased for eight straight months, but the pace of the rising indicator slowed in August. The indicator is made up three sector modules, and the banking module indicated the best growth, while the core GDP module was only barely positive. The construction module did not show growth or loss.
The KOF leading indicator is supposed to indicate the direction of economic growth six to eight months into the future, and the Swiss GDP was recently reported to have declined in Q2 for the first time in three quarters. Therefore, the leading indicator could suggest that the Swiss GDP will return to growth in the upcoming quarters.
Following the release of the negative Swiss GDP, the Euro rebounded from a 1.2000 floor against the Swiss Franc and climbed as high as 1.2180. However, EURCHF did not react significantly to the better than expected KOF indicator. The pair is currently trading slightly below 1.2100, which could continue to provide resistance.
EURCHF 15-minute: September 28, 2012
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