The Swiss economy remains stable.

The Swiss franc strengthens once again, primarily supported by the rapid weakening of the US dollar following the announcement of inflation data that fell more than expected. The month-on-month inflation rate dropped to 0.3%, which was lower than market forecasts, while Switzerland's inflation rate rose to 1.4%, reducing expectations of a relaxed policy from the Swiss National Bank (SNB). Furthermore, rising geopolitical tensions and potential trade risks slowing down have led the SNB to increase its foreign currency reserves for the fourth consecutive month.

Inflation in Switzerland increased to 1.4% in April, accelerating from 1% the previous month, mainly driven by a strong recovery in food and beverage prices. Demand for food continues to rise, while transportation inflation slightly decreased due to falling energy prices since the beginning of the year. Core inflation, which excludes volatile food and energy prices, increased by 1.2%.

Switzerland's unemployment rate is at 2.3%, down from 2.4% the previous month. The number of unemployed decreased by 1,636 from the previous month to 106,957. Meanwhile, the youth unemployment rate for those aged 15 to 24 dropped to 2.0% from 2.1%, a decrease of 301 individuals to 9,086. The rising inflation and falling unemployment may indicate that Switzerland's economy is heating up once again.

The yield on 10-year Swiss government bonds fell below 0.7%, following the global trend of declining bond yields due to the drop in US inflation on a month-to-month basis. Additionally, weaker US employment reports have led investors to speculate that there might be an interest rate cut soon. Furthermore, the Swiss National Bank has cut interest rates by 25 bps to 1.50%, making it one of the first central banks to ease monetary policy.

The consumer confidence index in Switzerland remains steady at -38.1, reflecting a still pessimistic outlook among consumers, although it has slowed down from the previous month. The main concerns are increased expenses and job security, as rising interest rates lead to higher costs for companies and an increased risk of layoffs. This also affects salary adjustments.

Techical analysis data (5H)

Resistance: 0.9106, 0.912, 0.9141

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 0.905 - 0.9071 but cannot break the support at 0.9071, you may set a TP at approximately 0.912 and SL at around 0.9036 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 0.9106 - 0.912, you may set a TP at approximately 0.9141 and SL at around 0.905 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 0.9106 - 0.912 but cannot break the resistance at 0.9106, you may set a TP at approximately 0.905 and SL at around 0.9141 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 0.905 - 0.9071, you may set a TP at approximately 0.9036 and SL at around 0.912 or according to your acceptable risk.

Pivot point May 17, 2024 06:25 AM. GMT+7