The Swiss franc is rallying midweek against multiple major currencies as investors are pouring into the safe-haven currency. With the central bank refusing to follow other institutions in easing monetary policy, traders were enthusiastic about the nationâs ability to weather the coming economic storm clouds, especially after the government slashed economic growth projections for 2019.
Recently, the Swiss government reduced its 2019 growth forecast by one-third, citing uncertainty surrounding the escalation in the US-China trade war and the worrisome slowdown in Germany. Federal Council economists say the national economy will likely advance by 0.8% this year, down from the previous estimate of 1.2% in June. This is also below the long-term average expansion of 1.7%.
It does anticipate 1.7% growth next year, unchanged from the previous prognostication this past summer.
Weaker development than previously assumed is anticipated for the global economy and uncertainty is high, which is weighing on the export economy and investment.
While this would typically sour investor sentiment, analysts are ebullient because the Swiss National Bank (SNB) has decided not to mirror monetary policy of leading central banks. In recent months, the SNBâs counterparts have been easing and become more accommodative, cutting interest rates and relaunching quantitative easing. The SNB decided to leave rates unchanged, sending the signal that it will only act when a real downturn occurs.
Moreover, after disappointing manufacturing numbers in Germany and the eurozone, traders are bullish over the franc, which is traditionally known as a safe-haven asset.
On the data front, the Economic Sentiment Index improved from -37.5 in August to -15.4 in September. This also beat the market consensus of -32.
The USD/CHF currency pair rose 0.5% to 0.9903, from an opening of 0.9855, at 15:41 GMT on Wednesday. The EUR/CHF slipped 0.14% to 1.0849, from an opening of 1.0861.
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