Switzerland may face a crisis next year.

The Swiss Franc remains weak, falling below 0.92 Swiss Francs per US Dollar due to the recent decision of the Swiss National Bank (SNB) to keep interest rates unchanged. Additionally, interest rate differentials with the United States have caused significant capital outflows, exerting continuous pressure on the Swiss Franc's value, despite some foreign exchange sales.

The Swiss National Bank has maintained its policy interest rate at 1.75%. SNB stated that the tightened monetary policy in recent quarters is putting pressure on the remaining inflation. Although investors anticipated another 25bps rate hike, SNB policymakers suggested that further tightening may become necessary to maintain the stability of the Swiss Franc in the medium term. They will closely monitor inflation rates in the coming months.

It is expected that the inflation rate will remain at 2.2% for both 2023 and 2024, with GDP growth for the Swiss economy around 1% in the third quarter compared to the previous year. Furthermore, a trade surplus of up to 4.18 billion Swiss Francs is anticipated in the third quarter, with only a slight increase in imports and a notable 5% increase in exports, driven primarily by the United States, Germany, and China, which together account for nearly 40% of total exports.

The unemployment rate in Switzerland has increased by 2%, representing an additional 2,280 unemployed individuals, from the previous month, bringing the total to 89,881. At the same time, the youth unemployment rate, measured among individuals aged 15-24, has risen by 2.2%, up from the previous rate of 1.8%. Market expectations suggest that the unemployment rate is expected to continue rising in the fourth quarter and until the second quarter of 2024, with projections indicating it could reach as high as 2.7%.

The yield on Swiss government 10-year bonds has remained stable at 1%, reflecting a contrast with rising bond yields in both Europe and the United States. Despite no corresponding increase in interest rates, the rising inflation has limited borrowing costs, compounded by the slower economic growth in Switzerland. This has resulted in relatively lower returns for investors and has made investments in various businesses less attractive.

Techical analysis data (5H)

Resistance: 0.9177, 0.9187, 0.9196

Support: 0.9158, 0.9149, 0.9139

Source: Investing.com