Switzerland deeper in recession than expected

The effect of a stronger franc is more likely to become visible in the market. And these prices illustrate that the deflationary momentum continues. 

The price index is now an impressive 6% below last year's level, with a falling trend. According to Commerzbank, Switzerland is moving further away from a state of price stability than those who are trying to sugar coat the SNB step are letting on. 

As was to be expected the FX market reacted to the once again massively disappointing data with franc weakness. The majority of market participants still seemed to think that the SNB would be able to react to these developments. The realisation that it has long since reached the end of the line has not yet been reached. Otherwise EUR-CHF would have to ease rather than appreciate following the publication of price data such as this. 

"Yesterday was not the first time that the exchange rate was trading under the assumption the SNB would still be able to do something.The SNB is unable to do anything EUR-CHF will come under pressure simply because some of the moves of the past will have to be corrected", says Commerzbank.