The USDCHF pair was little changed even as the State Secretariat for Economic Affairs (SECO) released disappointing consumer sentiment data.
Swiss consumer sentiment falls
Data from SECO showed that consumer sentiment in Switzerland dropped to a historic low as the coronavirus pandemic dampened the mood in the country. According to the report, sentiment dropped to a record low of minus 56 from the previous minus 7. Notably, this was the ninth straight months of declining and the worst number ever recorded in decades. According to SECO, the last time numbers were these low was in the early 90s.
Most people in Switzerland were worried about the general economic development in April. This sub-index declined to minus 78. Most of them were also worried about their employment situation with the respective index dropping to the lowest level since the past financial crisis.
Further, most people were worried about their budgets, with the expected financial situation index falling to a record low of minus 24.
On a positive note, most people are comfortable with their past financial position. This has been supported by relatively low consumer prices and higher salaries.
Recent data has shown that the country is headed for a recession. A report by BAK Institute expects the economy to shrink by 2.5% this year with unemployment rate rising by 3.1%. On the other hand, analysts at UBS predict that the GDP will drop by 1.3% this year.
Switzerland inflation falls
The USDCHF pair wobbled as the market reacted to disappointing inflation number from the Federal Office of Statistics. The report showed that consumer prices declined by 0.4% in April after rising by 0.1% in the previous month. On an annualised basis, the CPI fell by 1.1% in April.
According to the office, most categories looked at contracted in April. The only positive price increase was in alcoholic beverages, education, and restaurants and hotels. These gains were offset by a decline in clothing and footwear, transport, recreation and culture, and healthcare.
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USD/CHF technical outlook
The USD/CHF pair was little changed amid the weak data from Switzerland. On the daily chart, we see that the pair is attempting to have the second consecutive day of gains. Additionally, the pair found significant support at the 50% Fibonacci retracement level at 0.9597.
Also, the price is slightly above the 50-day EMA. Therefore, at this point, I expect the pair to breakout in either direction. However, a move below the 50% retracement of 0.9597, will likely see the pair continue falling as bears prevail.