Swiss Franc reacts slightly to the highest KOF economic barometer in 7 years

Mixed trading before KOF data

Before the announcement of KOF Swiss Economic Institute barometer for October, the Swiss Franc was trading mixed against its major currency rivals. The exchange rate of EUR/CHF was at 1.1596 francs, which was a bit lower than on the Friday trading. The Swiss Franc continue to be weaker against the euro, but things were looking a bit better for Switzerland’s currency when it comes to the exchange rate against the yen, the US dollar and the pound. In coupling GBP/CHF it rose to 1.3110 francs, it also rose against the US dollar to 0.9984 and kept the same tendency in JPY/CHF coupling which was 113.92 francs.

Beating the expectations

KOF Swiss Economic Institute is releasing once a month its most important indicator – the forward-looking economic barometer. The KOF barometer announcement as of this month, came on Monday, October 30th, in the early morning and prove to be much better than forecasts had been expecting. In October, KOF Economic Barometer climbed to 109.1 from 106.1 in September, a result revised from 105.8. It was second month in a row of improvement. This result is the best one in seven years – since Sept. 2010. Economists had been expecting KOF barometer to hit 106.5. The upward tendency of KOF was influenced mainly by banking and manufacturing indicators. Industrial producers gave the best forecasts in terms of metal, gear, paper, machinery and electrical fields. Also prospects for exports and forecast in food or accommodation industries proved to be better than before. Whereas outlook for chemical and wood industries were a bit downcast.  The outlook for domestic consumption remained stalled and hopes for improvement in construction have been weak. In general, sector of manufacturing and constructing showed optimism about recruitment or competitiveness, but was worried about demand and production component indicator was lower as well.

The Swiss Franc was not impressed

The beating-the-expectations and record high in seven years level of KOF indicator didn’t prove to be much of encouragement for investors to buy Swiss Francs. Trading against major rivals improved compared to the state before the announcement of economic barometer, but just slightly and not in all instances. The exchange rate against the euro was up at 1.1599 francs, against the pound it rose to 1.3124, the coupling USD/CHF stood at 0.9983 – a small revise from 0.9984 before, whereas against the yen, the Swiss franc was trading at 113.92, which was exactly the same as in the lead-up to the disclosure of KOF indicator for October.

Elsewhere on the currency market

In other news on the currency field, Monday saw the euro recover from its bad spell of three-month low as it traded in coupling EUR/USD at 1.1635 dollars, up 0.2 percent. Previously, the European Central Bank’s decision to continue its loose monetary policy and bond purchase program well until September 2018 with possibility of prolongation, had sent the euro significantly lower. The weekend brought a bit of relief in terms of ongoing Catalan turmoil, as polls showed that secessionists might not be winning a majority in December’s local elections. Also, a drop in Spain’s borrowing costs has settled nerves of investors thinking about buying euros. Even though EUR/USD seemed to regain its vigour, this exchange rate is still considered weak and its prompting pressure on supply of currencies in the emerging markets. The US dollar is also flat against the yen, dropping to 113.58, a significant decline from the result on Friday closing of trading, when JPY/USD exchange rate of 114.45 was the highest in three months.