With the declining trade balance numbers from just a few months back, it was becoming obvious that Switzerland’s ability to export was being severely undermined by a rising franc (CHF). As response to that weakness, among other factors, the Swiss National Bank (SNB) chose to peg the CHF to the EUR at a fixed rate. This month’s trade numbers support that move.
As exports were falling, the Swiss economy was at threat of losing much of the gains made through the recession. The pegging move helped stabilize the value of the Swissie. This stabilization appears to have translated over into a higher trade surplus than was forecast, giving impetus to the idea that pegging the currency was a good move. Moreover, the ZEW reading on the Swiss economy this morning was also much more optimistic than last month, adding weight to this notion.
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Greg Holden is the Chief Market Analyst at ForexYard. Greg uses his detailed knowledge of fundamental and technical analysis to provide some of the leading market forecasts in the forex world today. A guest lecturer at forex symposiums and Chief Editor of ForexYard's analysis center, Greg brings highly detailed and easy-to-use market analyses to his clientele. He has been published on ForexYard's Trading Blog and affiliate websites. Greg holds degrees in Political Science and Economics from Missouri State University, as well as a Masters degree in Middle Eastern History.
