Swiss Franc bounces up from monthly lows as GDP, inflation data beat expectations

USD/CHF retreats below 0.8100 on Thursday after hitting a monthly high of 0.8156 on Wednesday.
Swiss GDP data shows that the economy grew at its fastest pace in five years in Q2.
Swiss inflation accelerated to a 0.8% year-on-year growth in July, easing concerns about deflation.

Guillermo Alcala FXStreet

The Swiss Franc (CHF) accelerated its recovery against the US Dollar (USD) on Wednesday’s early European session, as Swiss inflation and economic growth data beat expectations. The USD/CHF pair has dropped to session lows below 0.8100 after hitting fresh monthly highs at 0.8156 on Wednesday.

Data from the Swiss State Secretariat for Economic Affairs released earlier on Thursday revealed that the country’s Gross Domestic Product (GDP) grew at a 1.9% pace in the second quarter, posting the strongest performance in five years. The market consensus had anticipated a 1.6% rise, following a downwardly revised 0.6% increase in the first quarter. Yearly GDP growth jumped to 2.8% from 0.5% in the first three months of the year.

Previously, August Consumer Price Index (CPI) data released by the Swiss Federal Statistics Office showed that inflation accelerated to 0.4% in August, after a 0.1% contraction in July, beating expectations of a flat reading.

Year-over-year, consumer prices rose 0.8%, their fastest growth in two years, twice as much as July’s 0.4% and significantly above market expectations of a 0.5% reading.

US Employment figures fall short of expectations

In the US, the ADP Employment Change report, released on Wednesday, disappointed. ADP data showed a mere 38K increase in net private employment in August, below the 44K expected by the market and the weakest reading in the last seven months.

Apart from that, New York Federal Reserve President John Williams affirmed that rising bond yields are due to a solid economy, rather than to inflation fears, and that the central bank is still collecting data to decide on interest rates. Laterr on Thursday, the focus will be on Board member Christopher Waller’s speech, who is likely to offer a more hawkish view.

Economic Indicator

Gross Domestic Product (QoQ)

The Gross Domestic Product (GDP), released by the State Secretariat for Economic Affairs (SECO) on a quarterly basis, is a measure of the total value of all goods and services produced in Switzerland during a given period. The GDP is considered as the main measure of Swiss economic activity. The QoQ reading compares economic activity in the reference quarter to the previous quarter. Generally, a high reading is seen as bullish for the Swiss Franc (CHF), while a low reading is seen as bearish.

Economic Indicator

Consumer Price Index (MoM)

The Consumer Price Index (CPI), released by the Swiss Federal Statistical Office on a monthly basis, measures the change in prices of goods and services which are representative of the private households’ consumption in Switzerland. The CPI is the main indicator to measure inflation and changes in purchasing trends. The MoM figure compares the prices of goods in the reference month to the previous month. Generally, a high reading is seen as bullish for the Swiss Franc (CHF), while a low reading is seen as bearish.

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