Dark Clouds above the Swiss Alps ... and the economy.

PrimeTrading Updated   
Quick question:
Which Swiss export sector is the only one that has so far kept its head above water relatively well and did not have to report a decline in sales in the second quarter of 2023?
Write your answer in the comments!
(No cheating please!;)

That the Swiss economy runs like a (Swiss) clockwork was once upon a time.
As predicted in my CADCHF trade idea, dark clouds are gathering over the skies of the alps and also over the Swiss economy.

- Manufacturing PMIs have now fallen to their lowest level (38.5!) since the 2008 financial crisis.
The Swiss economy is thus following its big neighbour to the north -> good old Germany.

-> One of the main reasons for this is the too strong Swiss franc, which is hurting Swiss exporters and even the otherwise so crisis-proof pharma industry.

-> There is exactly one institution that could change this in no time:
Which is still propping up the CHF with billions.
Which is the only G10 central bank that has already managed to push inflation below the 2% mark (as I already predicted in February).
This institution with the 3 letters could weaken the CHF to give the Swiss export economy at least a little breathing space.

Will it do so?
I am sure we will be smarter by September ;)

Until then, it will rain regular updates here... with the reliability of a Swiss clockwork.
Brief update:

The trade is staggering along in the same place and I don't expect it to pick up speed until December. In the meantime, the positive swap is sweetening my wait :)

Meanwhile, the Swiss sentiment indicators fell further into contractionary territory and Switzerland is also on the brink of recession.

The only (but admittedly important) points keeping the Swiss franc alive are the recent strong risk-off sentiment triggered by the Middle East conflict and the SNB's FX sales.
The SNB's FX reserves have fallen to 2016 levels and it remains to be seen how long the Swiss National Bank will continue to play this game once Switzerland falls into recession.
🏛🇦🇺Now that the RBNZ has been extremely hawkish tonight and has brought further rate hikes into play, the trade will most likely pick up speed (as described above -> from December).

➡️I also see another RBNZ rate hike as a likely, if not inevitable, scenario (60% probability)

➡️Furthermore, contrary to the market, I do not currently see the conditions for the almost 4 rate cuts that it is currently pricing in.

🟢On the contrary: it is questionable whether the RBNZ will cut interest rates at all in 2024🟢
🇨🇭 From a Swiss perspective, next week's inflation data will of course be extremely exciting, as this is the last release before the SNB's interest rate decision next week.

My Update will follow next week!✅️
📊🇨🇭The Swiss GDP (YoY) disappoints as it is revised downward. Switzerland is heavily flirting with a recession and it's looking good that they will come to 3rd base! ;)
-> Good for my NZDCHF Trade✅️
📊🇨🇭Swiss Inflation comes in much (!) weaker (1.4) than consensus (1.7) expected it!
-> Now it gets interesting: Rate Hikes are out of the question now. After the next SNB meeting next week the discussion will only be about when the 1st rate cut should be in 2024.
-> Great news for my NZDCHF Long!
🏛🇨🇭 According to current surveys by the Reuters agency, most economists expect the SNB to cut interest rates for the first time in the third quarter of 2024.
-> I would wait for the inflation data for December and January, which will show a slight upward trend, before making a serious forecast.
-> More after the SNB's interest rate decision this week🟢
🟢The trade starts to move finally🟢
Already +110 Pips in Profit✅️

Helped by a dovish SNB🏛🇨🇭 I'm pretty positive this trade will have legs from January on.
-> SNB declared their rate hiking cycle has ended, no further hikes are needed.
-> As I said in my previous CHF Short Idea: From next year on the discussion will be when not IF the SNB will first cut rates🟢
🏛🇦🇺 Yesterday, RBNZ Governor Orr once again emphasised the great uncertainty regarding interest rate developments in 2024.
I have to agree with him: A 1st rate cut in H2 24 cannot be ruled out after the exceedingly poor GDP data, but it will take a few more data points to have certainty here.

🟢 Meanwhile, my trade continues to develop in the right direction🟢
🇨🇭📊 Where you have to be a little cautious is the inflation data out of Switzerland over the next two months:
-> It will rise slightly, as the higher electricity prices are now having an bigger effect and also rental prices, which are adjusted once a year in Switzerland, will also contribute to an increase.
🟢The end of the year flows into the CHF should be over by now
-> The trade has a lot of room to move to the upside from here!🟢
(Of course the Swiss CPI wil be highly watched this week🇨🇭📊)
🇨🇭📊As forecasted the Swiss CPI saw a rise towards 1.7%.
📊🔮And as I said the next month will see a rise again this time to 2% or maybe even slightly above🔮📊
-> BUT: This rise will be temporary so the SNB won't act on it.
🏛🇨🇭I see the SNB cutting rates in June 24🟢

The trade will take some more time till the market also gets that the rise in inflation will only be temporary.
🔮Thats the curse of knowing where inflation and the economy is heading, often you have to wait for the market till he also gets it.
📊🇦🇺The business confidence out of New Zealand jumped materially higher this week.
-> Thats good news longterm for the NZD🟢

📊🇦🇺Next week we get the CPI data out of New Zealand. Together with the Employment data early next month it will determine how hawkish the RBNZ can be in its February Rate Decision. The question of course will be more about when we will get the first cut more than if more hikes could follow.
📊🇦🇺 The inflation data from New Zealand came out more or less as expected, the labour market data today will be more exciting.

📊🇦🇺But with the strong employment report out of New Zealand yesterday I still like the NZDCHF Long as one of my favourite longs🟢

🇨🇭📊also next week's inflation data from Switzerland could finally provide more volatility✅️

⚠️📊🔮As predicted 2 months ago, Swiss inflation will rise towards 2% this time, or possibly even slightly higher🔮📊⚠️
🟢This week we are facing two extremely important data points for the NZDCHF with the
🏛🇨🇭SNB's interest rate decision and the
📊🇦🇺GDP data from New Zealand

🏛🇨🇭 The market is expecting the SNB to cut interest rates with a 40% probability, which, if it actually materialises, would give my CADCHF long a decent boost🟢
🇨🇭🔮 But even if they didn't cut rates (60% probability) it wouldn't be a disaster because, as I predicted 4 months ago, the SNB will cut rates in June at the latest✅️

Quote 13 December 2023: "- My forecast: 1st interest rate cut by the SNB in summer 2024 (March or June)"
🏛🇨🇭 And the SNB was actually the first of the G8 central banks to cut interest rates back in March
-> the CHF got a good beating💥💥💥 (as expected)
-> great for my NZDCHF Long which is on its way into the promised land of Take Profits✅️

-> 🔮my prophecy from December last year came true🔮

! 🔮But that's not all folks🔮 !
-> 🏛🇨🇭Ich expect the SNB to cut interest rates again in June🔮
-> the CHF train will continue its downwards journey✅️


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