Swiss Franc Sinks Despite Positive Macros

The Swiss franc sank today, declining against all of its most-traded rivals. The reason for such a poor performance was unclear, considering that domestic macroeconomic indicators released on Monday were extremely good, beating expectations by a wide margin. Some market analysts theorized that the slump of the Swiss currency was a result of outflows into the US dollar, which was very strong on Monday.
Switzerland’s Federal Statistical Office reported that retail sales climbed by 4.9% in December from a year ago, adjusted for sales days and holidays. That is a sharp acceleration from the previous month’s 1.8% rate of growth. Economists were expecting a deceleration to 1.5%. Month-on-month, sales increased by 2.6%. That proves the sector remained resilient even in the wake of another wave of the COVID-19 pandemic.
Switzerland’s manufacturing Purchasing Managers’ Index reported by Procure demonstrated an increase to 59.4 in January from 58.0 in December. That is completely opposite to market expectations of a decline to 56.5. Economist Claude Maurer at Credit Suisse commented on the result:

While seasonal adjustment factors at the start of the year skewed comparisons slightly, not only is the rally in manufacturing continuing, it has actually broadened further-despite the second wave of COVID-19 and the tightening of restrictions to contain the virus.

Despite the supporting fundamentals, the Swissie was performing extremely poorly on the first trading day of February. One of the possible reasons for that was the fact that the market sentiment was positive, as was proven by the broad-based rally of stocks in Asia, Europe, and America. The franc, being considered a safe currency, usually fares poorly in an environment of optimism and risk appetite. But that makes the rally of the greenback even more puzzling.
USD/CHF surged from 0.8889 to 0.8968 as of 20:16 GMT today. EUR/CHF rallied from 1.0786 to 1.0822. GBP/CHF gained from 1.2101 to 1.2255, reaching the high of 1.2294 intraday.
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Original from: www.earnforex.com