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KOF Misses Sending Swiss Franc Lower

Last updated 1/28/2009 6:01 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

The KOF index of Leading indicators printed at -0.87 versus expectations of -0.53 and far lower than -0.39 the  month prior as the Swiss economy continued to deteriorate feeling the squeeze from both the slumping manufacturing exports and the reeling finance sector that saw  many of the country’s leading banks suffer record losses in the past year.  

The news suggests that the SNB will continue to ease monetary policy most likely joining US and Japan near the zero interest rate level by the end of Q1 of 2009. The franc which for the longest time was viewed as a bastion of strength and financial stability has seen its reputation suffer greatly over the past six months as investors become increasingly concerned about the exposure of the Swiss economy to the massive losses in the country's banking sector.

The Swissie lost ground to both the euro and the dollar as the result  of the disappointing news with USDCHF gaining more than 100 points in the past two hours.  If risk appetite remains healthy for the rest of the day, the franc could see further weakness especially against the euro as traders make adjustments for the anticipated move to near ZIRP like conditions.

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.