The August edition of Switzerland’s Trade Balance is due for release, with expectations calling for the surplus to contract to 1.03 billion francs from 2.37 billion in July. Leading indicators are conflicting: traders could see a boost to imports from buoyant consumer demand, supporting forecasts. Indeed, Retail Sales nearly tripled expectations earlier this week to grow 6.2% versus forecasts of just 2.3%, reflecting strength in the labor market.
That said, the outlook for demand is far from certain as Consumer Confidence sank to the lowest level since 2004 in the three months to August. Further, growth in Producer and Import Prices slowed -0.5% in August, surpassing expectations of a -0.2% decline. This reflects the falling price of crude oil and will put downward pressure on the total import bill. On the export side of things, acute slowdown in the European Union will keep a lid on overseas demand for Swiss products. Indeed, the mountain nation sends 60% of its outbound shipments to the regional bloc.
Generally speaking, deterioration in the Trade Balance puts downward pressure on a county’s currency as it belies a greater outflow than inflow of money into the economy.
For a complete listing of this week's data releases, please see the DailyFX Economic Calendar.
Al Bawaba
