Swiss Franc Looks Past Soft 3Q GDP Data as ECB Looms Large
- Switzerland’s 3Q QoQ GDP stagnated at 0.0%. below expectations
- 3Q year-on-year GDP expanded 0.8%, as expected
- SNB might react on further QE by the ECB
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According to estimates released today by the Swiss State Secretariat for Economic Affairs (SECO), Switzerland’s Gross Domestic Product (GDP) stagnated in the third quarter of 2015, and came at 0.0 percent, below the 0.2 percent quarterly growth expected by economists, and below the prior quarter in which the economy grew 0.2 percent. The year-on-year change in GDP came in line with expectations as the report showed the economy grew at 0.8%, below the prior revised reading of 0.9 percent.
Looking into the report, SECO said that positive contributions to GDP came from households and public consumption, and balance of trade in goods. The balance of trade in services had a negative impact. On the production side, healthcare and the insurance sector experienced the strongest growth, while growth was also held back by weak performance in construction and the financial sector.
The SNB will hold its rate decision on December 10. The central bank’s deposit rate is already set at negative -0.75 percent, with the purpose of devaluing the currency after dropping the currency cap against the Euro at the start of the year. With further easing by the ECB widely expected two days from now, and possibly even a deposit rate cut, speculation rise that the SNB might have to keep the Franc devalued by intervening in the FX market and/or cutting the deposit rate further down in negative territory. With this in mind, today’s GDP figures did little to change the underlying concerns regarding ECB actions, and the Franc was little changed.
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