Swiss Franc Crosses Pare Gains, Driven by Risk Aversion

Daily Forex Fundamentals | Written by DailyFX | Dec 04 08 08:37 GMT |

The Swiss franc firmed up in to the European session, with gains coming against the euro and sterling ahead of today's key rate decisions from the BoE and the ECB. EUR-CHF traded back in to 1.5300 versus an Asian peak of 1.5381 and GBP-CHF reverted to the 1.7750 area against an Asian high of 1.7898. Both crosses are expected to trade defensively during the European morning, with appetite for risk hampered ahead of the policy announcements. Meanwhile, USD-CHF is marking time around 1.2100 after making a modest move higher in to the European open. Again, momentum in the dollar pairing is lacking, although low risk trading strategies should favor the dollar in the near-term. Elsewhere, comments from SNB's Roth on Wednesday did not have a significant impact on price action. He said that the Swiss economy probably escaped contraction in Q3, which was confirmed today after the release showed a flat outturn, but growth was revised down to 0.3% in Q2. Roth didn't offer anything to suggest another intermeeting cut is on the card, after he said that the SNB's cut on November 20th was to encourage a relaxing of the money market. Swiss 3Q GDP Fails to Impress, Heightening Growth Fears Swiss GDP growth was flat q/q in Q3, in line with expectations, while Q2 growth was revised down to 0.3% q/q from 0.4%. Private consumption rose by 0.3% q/q, while public consumption increased by 0.7%, highlighting government efforts to boost the economy and compared to 0.6% q/q and 0.4% q/q respectively in Q2. Investment growth continued to contract for a second quarter, down 1.4% q/q in Q3. Meanwhile, y/y GDP was 1.6%, versus a 1.7% median and compared to 2.6% in Q2 (revised down from 2.3%). Although the Swiss economy proved more resilient than most European economies to the credit crunch and the global slowdown in the first half of the year, economic activity is now slowing rapidly, as seen in recent sharp drops to the KOF leading indicator and PMI, and the risk for recession lingers. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.