Unemployment rates in Switzerland are rising again.

The Swiss franc weakened to 0.88 Swiss francs per US dollar due to sluggish economic data and decelerating growth. This is considered a primary reason causing divergences between the policies of the Swiss National Bank and the US Federal Reserve, leading to increasing gaps. Additionally, robust labor data in the US led investors and analysts to anticipate the Fed may maintain these high-interest rates and might start reducing them in the second quarter instead.

In Switzerland, the unemployment rate reached its highest in nine months. Various economic indicators continue to signal a slowdown. Consequently, the consistently declining inflation rate and a weakening economy might prompt the Swiss National Bank (SNB) to consider further monetary easing, potentially in the first quarter, to support sustainable economic recovery.

The Swiss inflation rate slowed to 1.4% year-on-year in November, marking the lowest inflation rate in recent years and indicating a continuous downward trend. Notably, inflation in the food and beverage sector remained high compared to other sectors, decreasing only to 3.2% from the previous reading of 3.3%. Furthermore, energy-related inflation surged to 3.2%.

Swiss unemployment rose to 2.1%, with 4,448 more people unemployed compared to the previous month, totaling 98,011 individuals. Youth unemployment (ages 15-24) remained at 2.1%, unchanged from October. The reduced hiring resulted directly from the prolonged sluggishness, impacting both manufacturing and service sectors.

Swiss GDP expanded by 0.3% in the third quarter following a 0.1% contraction in the previous quarter. This growth was driven by strong exports and a slight increase in imports. However, major industries in the country remained a concern, with average growth staying below 1%.

The Manufacturing Purchasing Managers' Index (PMI) rose to 42.1 in November, boosted slightly by new orders. Nonetheless, consistently high production costs over recent periods continued to drive continuous job cuts to their lowest level in three years, likely to decrease further.

The yield on Swiss 10-year government bonds dropped to 0.8%, influenced by positive expectations of an interest rate reduction next year. Moreover, the multi-sector Eurozone economic data began showing signs of easing inflation. Despite the lower-than-expected Swiss inflation, the Swiss National Bank opted to maintain its interest rate at 1.75% in its latest meeting, citing previous rate hikes causing overall sluggishness and economic growth concerns.

Techical analysis data (5H)

Resistance: 0.8812, 0.8822, 0.8835

Support: 0.8788, 0.8774, 0.8764

Source: Investing.com