Arnaud Masset
Swissquote Bank Ltd
Switzerland’s headline inflation missed expectation in November. The consumer price index rose only 0.9%y/y, following an uptick of 1.1% in the previous month, while market participants anticipated an increase of 1%y/y. This is the lowest reading since April 2018, when inflation rose 0.8%y/y. More worryingly, the core gauge that excludes the most volatile components such as energy products eased to 0.2%y/y, compared to forecast of 0.4%.
There are increasing signs that the Swiss economy is suffering from the rise in geopolitical uncertainty. As suggested by the last GDP figures, the slowdown in European growth, and international trade, had a significant impact on the Swiss economy. The gross domestic product fell 0.2%q/q in the third quarter, compared to an expected increase of 0.4% and an improvement 0.7% in the previous one. Against such a back, there is no doubt that the Swiss economy will continue to suffer. In its upcoming Quarterly Bulletin, which will be release on December 12, the Swiss National Bank (SNB) will doubtlessly adjust both its inflation and growth forecast to the downside.
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On Tuesday, despite a sell-off in equities the greenback fell across the board, with the Dollar index giving up 0.64%. The Swiss franc was up 0.43%, while the single currency rose 0.55%. Investors are slowing reducing their exposure to the buck amid mounting expectations that the Fed is almost done with its hiking cycle.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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