Declining Swiss Exports Support SNB’s EURCHF Floor Policy

By Benjamin Spier,

THE TAKEAWAY: Swiss trade deficit drops in March and misses expectations -> Lower exports are likely to support the SNB’s currency intervention program -> EUR/CHF 1.2000 floor remains intact

The Swiss trade balance dropped to 1.688 billion in March, well below analysts’ 3 billion expected level, as Swiss exports fell and imports rose. Seasonally adjusted real exports dropped 2.5% from February, as real imports were up 4.6%, according to a report from the Federal Customs Office.

The drop in exports comes at a time when the Swiss National Bank has been fighting off an exaggerated strengthening of the Swiss Franc. As economic signs have been worsening in Europe, traders are moving their money to the franc as a safe-haven. Worrying that that a rise in the cost of their currency would curb exports, the SNB has been buying Euros as part of an effort to create a 1.2000 floor in EUR/CHF. It could be suggested that today’s disappointing exports will only encourage their policy, maybe even lead to an elevation of the floor.

EUR/CHF did not move significantly on the news of decreased exports and remains in the consolidated range above 1.2000 and below 1.2034. EUR/USD dropped to new daily lows following the report, but remains in yesterday’s trading range.
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: