Swiss Franc Gains After Positive GDP & Manufacturing PMI Reports

The Swiss franc logged gains versus a basket of currencies today, getting help from positive domestic macroeconomic reports. Economists do not expect tomorrow’s data to be good, though.
Switzerland’s Federal Statistical Office reported that gross domestic product grew by 7.2% in the third quarter of 2020 after falling 7.3% in the previous three months (revised positively from an 8.2% drop). Over the first half of the year, the economy contracted by 8.6%. The Swiss economy experienced its first recession since the height of the global economic crisis in 2009. Looking deeper into the components that have contributed to the third quarter’s growth, the report said:

Domestic demand and parts of the service sector recovered significantly, while international developments had an adverse impact on exports.

According to data from Procure, the manufacturing Purchasing Managers’ Index rose from 52.3 in October to 55.2 in November. That was a total surprise to analysts, who had predicted a drop to 51.5. The report explained the positive result:

Even though autumn saw Switzerland being hit by a bigger-than-expected second wave of the virus, the manufacturing PMI has consistently been inside growth territory since August. There are probably two reasons for the sector’s improved performance versus its showing during the first wave. Firstly, unlike in spring supply chains are now running smoothly. Secondly, north Asia in particular – i.e. China, but also Japan and South Korea – have got the pandemic under control. Swiss industry not only benefits directly from demand out of Asia, but also indirectly, for example as a supplier to the German automotive industry.

Tomorrow, the Federal Statistical Office will release a report on inflation in November. Analysts predicted ahead of the release that the Consumer Price Index will show a drop of 0.1% after demonstrating no change in October.
USD/CHF sank from 0.9086 to 0.9008 as of 15:57 GMT today. CHF/JPY jumped from 114.80 to 115.93. At the same time, EUR/CHF rose from 1.0837 to 1.0840.
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