Switzerland is still concerned about inflation and may consider raising interest rates.

The Swiss Franc has weakened due to the strengthening of the US Dollar. Investors are still awaiting a decision regarding the interest rates by the Swiss National Bank (SNB), as SNB policymakers express concerns about the potential impact of inflation on the Swiss economy due to strong wage growth. Investors anticipate that the SNB may increase interest rates by another 25bps this week.

Recent data has shown a continuous decline in Switzerland's inflation rate, with the annual inflation rate standing at 1.6% in August. However, the ECB's interest rate hike has raised concerns among SNB policymakers about the impact of diverging interest rates compared to the Eurozone. This divergence could affect the value of the Swiss Franc and potentially lead to inflationary pressures. Therefore, the SNB's interest rate hike is aimed at maintaining the stability of the Swiss Franc and is seen as a measure to combat inflation.

Switzerland's GDP has grown by 0.5% compared to the previous quarter but has stalled when compared to the same quarter last year, following expectations of a 0.1% expansion. This indicates a resurgence in the Swiss economy, with private consumption expanding by 0.4% from 0.6% in the previous quarter. However, government consumption has slowed down by 0.1% from 0.4%. Additionally, imports have contracted slightly, while exports are showing signs of improvement.

The trade surplus in Switzerland increased to 3.2 billion Swiss Francs in August, up from 2.6 billion Swiss Francs in the previous month. This increase is primarily attributed to a 6.6% month-on-month (MoM) growth in exports. Most of the exports were destined for the United States, followed by Germany. However, it's worth noting that exports to China decreased slightly, although China remains a significant trading partner, accounting for approximately 11% of total exports.

To maintain the stability of the Swiss Franc and mitigate inflation resulting from imports, the Swiss National Bank (SNB) has continued its intervention in the foreign exchange market by consistently selling foreign currencies. This has significantly reduced the SNB's foreign currency reserves, which stood at 694.3 billion Swiss Francs in August.

Techical analysis data (5H)

Resistance: 0.8981, 0.8989, 0.8994

Support: 0.8968, 0.8963, 0.8955

Source: Investing.com