Switzerland Q1 GDP and Greek political developments at the spotlight for the CHF

Q1 Swiss GDP (Friday) is expected to be soft (consensus: 0.0% q/q), reflecting to a large extent the delayed pass-through of an increasingly expensive CHF on real economic activity. 

"We continue to expect a weaker CHF, as SNB measures provide a meaningful disincentive to own Swiss assets" says Barclays.

A weaker CHF, in line with fundamentals and fair value estimates, should improve a rather grim economic outlook. 

Consumer prices dropped further into negative territory in April (-1.1% y/y from -0.9% y/y), whereas the effect of the recent CHF appreciation is yet to be fully reflected on growth data. 

The recent sharp drop in the KOF leading indicator for growth poses downside risks to GDP in the forthcoming quarters. Yet, safe-haven event risks persist, in the context of Greek political uncertainty and could trigger further SNB action in coming months if a safe-haven scenario materializes.