CHF: Growth cools down, negotiations with the US continue – Commerzbank

Growth figures for the second quarter will be published in Switzerland this morning. The Bloomberg consensus expects weak growth of 0.1% quarter-on-quarter, which would align with the growth adjusted for sporting events reported two weeks ago, Commerzbank's FX analyst Michael Pfister notes.

Switzerland is trying to reduce tariffs to roughly EU levels

"However, we see more upside risks, with our model predicting a figure of around 0.3%. In light of the recently introduced high US tariffs, this would suggest that the real economy has not yet stalled completely, at least not by the end of June. However, the impact of such a positive surprise on the Swiss franc is likely to be limited, since the Swiss National Bank does not prioritise growth in its decision-making process to the same extent as other central banks."

"Apart from the growth figures, negotiations on lower tariffs with the US are ongoing: Switzerland is trying to reduce tariffs to roughly the level achieved by the EU (15% instead of the current 39%). To this end, it is preparing a comprehensive package of concessions in the hope of convincing the US."

"This is likely to result in a package that is similarly unrealistic to that presented by the EU, which was met with immediate scepticism regarding how the EU could possibly purchase such large quantities of US LNG. Our baseline scenario remains that a deal will ultimately be reached. However, each passing day without an agreement highlights how much more expensive it is likely to be. This is not a good sign for Switzerland."