Swiss Franc and Euro Fell While the Pound and Canadian Dollar Rose
Swiss franc fell due to depressed economic outlook
The Swiss franc fell against the US dollar on December 23, 2015, after an unexpected drop in the KOF barometer—a leading economic indicator. Published by Zurich-based KOF Swiss Economic Institute, the economic barometer released at 96.6 in December—compared to expectations of an index value of 99.1 and the previous month’s reading of 97.3. The figure in December was the lowest since April. It weighed on the value of the franc. A deterioration in the manufacturing activity combined with negative sentiment in the construction sector contributed to the suppressed outlook in the KOF indicator. The low reading also indicates that the value of the franc is higher. It needs to depreciate more to catalyze economic growth.
Dismal economic releases in December
The SNB (Swiss National Bank) has been keeping an ultra-eased monetary policy. It has been keeping interest rates in the negative zone at -0.75% to stimulate economic growth. In the third quarter, the GDP (gross domestic product) was flat on a quarter-over-quarter basis. Consumer prices fell by 1.4% on an annualized basis in November. On the other hand, the unemployment rate rose slightly for November. Retail sales fell by 0.8% on an annualized basis in October. To learn more, read Swiss Franc Fell after Swiss National Bank Maintained Rates.
Impact on the market
Looking at Swiss ETFs, the iShares MSCI Switzerland Capped ETF (EWL) rose by 1.7% on December 23, 2015. In contrast, the Guggenheim CurrencyShares Swiss Franc ETF (FXF) fell by 0.27%.
Swiss ADRs (American depositary receipts) were trading on a mixed note. ABB (ABB) rose by 1.9%. Logitech International (LOGI) fell by 0.07%. Credit Suisse Group AG (CS) was trading higher by 2.7% on December 23.
Browse this series on Market Realist: