CHF immune to lacklustre trade data
|Swiss trade data came on the soft side in April, highlighting the negative effects of a high level of political uncertainty that stemmed from the French elections and Brexit talks. Exports contracted 2.5% m/m in April compared to a downwardly revised reading of 1.8% in the previous month. On the contrary, imports rose 2.6% from 0.6% a month earlier. Accordingly, the trade balance printed at CHF 1.97 billion, the lowest level since December 2014 when it came in at CHF 1.51 billion.
After a short but encouraging recovery in March, the Swiss Watch industry experienced rough market conditions in April. Exports contracted 5.7% y/y as the demand from Hong Kong and the USA, the two largest importers, contracted significantly: -16.8% and -19% respectively. On a more positive note, the exports to mainland China and the United Kingdom kept their positive momentum, thereby limiting the damage. The disappointing April trade figures are a good reminder that a unified and stable European Union is a necessary ingredient for a successful Swiss economy.
EUR/CHF was treading water at around 1.0935 this morning. From a technical standpoint, the 200dma currently lying at 1.0784 remains the strongest short-term support, while on the upside the 1.10 psychological threshold will act as resistance.
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