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.
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