ECONOMIC ANALYSIS LONG
Detailed Report on the NZD/CHF Currency Pair
Fundamental Economic State
New Zealand:
GDP Growth: New Zealand's economy is projected to grow by 1.1% in 2024, following a significant slowdown due to tight monetary policy and a decline in private investment and government consumption. The GDP growth is expected to recover to 1.5% in 2025 (IMF) (FocusEconomics).
Employment Data: The unemployment rate is stable at around 4.0%, reflecting a tight labor market. Despite the economic slowdown, employment growth has remained relatively strong (OECD) (IMF).
Inflation Rates: Inflation in New Zealand has declined from its peak, currently around 3.0%, and is expected to fall further in the coming quarters. The Reserve Bank of New Zealand (RBNZ) has maintained a tight monetary policy to combat persistent inflationary pressures (IMF) (Stats NZ).
Retail Sales: Retail sales have seen a slight uptick in early 2024, ending a period of consecutive quarterly declines. This improvement is supported by rising consumer confidence and increased tourist arrivals (OECD) (FocusEconomics).
Trade Balances: New Zealand's current account deficit remains above its long-run average, although it has narrowed slightly due to lower domestic demand and reduced oil prices. Export growth has been supported by strong demand for agricultural products (IMF) (FocusEconomics).
Fiscal Policies: The New Zealand government is running a structural fiscal deficit, with spending-to-GDP ratio higher than expected due to responses to rising costs and weather-related events. The fiscal policy remains more expansionary compared to other advanced economies (IMF).
Switzerland:
GDP Growth: Switzerland's economy is experiencing moderate growth with projections of around 1.5% for 2024. The economy remains stable, supported by robust industrial production and strong financial services sector (IMF) (FocusEconomics).
Employment Data: Switzerland boasts a low unemployment rate, consistently below 3.0%, reflecting a highly efficient labor market and strong demand for skilled labor (IMF).
Inflation Rates: Swiss inflation remains low, around 1.5%, which is well within the target range of the Swiss National Bank (SNB). The country's strong currency and stable economic environment contribute to subdued inflationary pressures (IMF).
Retail Sales: Retail sales in Switzerland have shown steady growth, driven by high consumer confidence and robust domestic consumption. The stable economic environment supports continuous retail sector expansion (IMF).
Trade Balances: Switzerland maintains a significant trade surplus, driven by high exports of pharmaceuticals, machinery, and financial services. The strong Swiss franc continues to support the country's trade balance (IMF).
Fiscal Policies: Switzerland's fiscal policy is characterized by prudence and sustainability. The government runs a budget surplus and maintains low public debt levels, ensuring long-term economic stability (IMF).
Daily Percentage Changes
Over the past month, the NZD/CHF exchange rate has experienced fluctuations driven by various economic data releases and market events. Key movements include:
Early May 2024: A decline in NZD following weak economic data from New Zealand, including lower-than-expected GDP growth figures.
Mid-May 2024: An increase in NZD driven by stronger retail sales and consumer confidence data, along with a slight improvement in inflation rates.
Late May 2024: Volatility due to geopolitical tensions and speculation around central bank policy decisions in both New Zealand and Switzerland (OECD) (IMF) (FocusEconomics).
News Analysis
Recent news impacting the NZD/CHF exchange rate includes:
RBNZ Announcements: The RBNZ's decision to maintain a tight monetary policy has led to periods of stability for the NZD (IMF) (Reserve Bank of New Zealand).
Swiss Economic Data Releases: Strong Swiss industrial production and low inflation have supported the CHF, contributing to its strength against the NZD (IMF) (FocusEconomics).
Geopolitical Developments: Global economic uncertainties and trade negotiations have influenced market sentiment and currency valuations (IMF) (FocusEconomics).
Interest Rate Expectations
RBNZ: The RBNZ is expected to maintain its current interest rate of 5.5% through 2024, with potential adjustments depending on inflation and economic growth trajectories (IMF) (Reserve Bank of New Zealand).
SNB: The Swiss National Bank is likely to keep interest rates low, around 1.5%, to support economic growth and maintain price stability. The SNB's cautious approach to monetary policy supports the stability of the CHF (IMF).
Commodity Prices and Market Sentiment
Dairy and Agricultural Products: New Zealand's economy heavily relies on exports of dairy and other agricultural products. Fluctuations in global demand for these commodities significantly impact the NZD (IMF).
Gold: As a safe-haven asset, gold prices influence the CHF. Strong gold prices support the CHF, reflecting its role as a stable currency in times of economic uncertainty (IMF).
Projection Figures
Based on current economic data and trends, the NZD/CHF exchange rate is projected to be around 0.57 by the end of June 2024. This projection considers stable commodity prices, steady interest rates, and moderate economic growth in both countries (IMF) (FocusEconomics).
Trade Ideas
Short-term: Consider going LONG on NZD/CHF at current levels (around 0.55) with a target of 0.57, based on expected improvements in New Zealand's economic indicators and steady Swiss economic performance.
Long-term: A cautious LONG position could be taken with a target of 0.58, assuming a gradual improvement in global economic conditions and positive impacts from fiscal policies in both countries (IMF) (FocusEconomics).
Current Price Consideration
As of now, the NZD/CHF is trading around 0.55. The projections and trade ideas are aligned with this current price, ensuring relevance and accuracy based on the latest economic data and market conditions (IMF) (FocusEconomics).
Additional Considerations
Global Macroeconomic Trends: The global economic outlook, particularly developments in major economies like China, will continue to influence the NZD/CHF pair.
Seasonal Trends: Historical data indicates that certain seasonal patterns may affect currency movements, which should be considered in the analysis.
By keeping these factors in mind, the provided projections and trade ideas aim to offer precise and realistic guidance based on thorough economic analysis.
Fundamental Economic State
New Zealand:
GDP Growth: New Zealand's economy is projected to grow by 1.1% in 2024, following a significant slowdown due to tight monetary policy and a decline in private investment and government consumption. The GDP growth is expected to recover to 1.5% in 2025 (IMF) (FocusEconomics).
Employment Data: The unemployment rate is stable at around 4.0%, reflecting a tight labor market. Despite the economic slowdown, employment growth has remained relatively strong (OECD) (IMF).
Inflation Rates: Inflation in New Zealand has declined from its peak, currently around 3.0%, and is expected to fall further in the coming quarters. The Reserve Bank of New Zealand (RBNZ) has maintained a tight monetary policy to combat persistent inflationary pressures (IMF) (Stats NZ).
Retail Sales: Retail sales have seen a slight uptick in early 2024, ending a period of consecutive quarterly declines. This improvement is supported by rising consumer confidence and increased tourist arrivals (OECD) (FocusEconomics).
Trade Balances: New Zealand's current account deficit remains above its long-run average, although it has narrowed slightly due to lower domestic demand and reduced oil prices. Export growth has been supported by strong demand for agricultural products (IMF) (FocusEconomics).
Fiscal Policies: The New Zealand government is running a structural fiscal deficit, with spending-to-GDP ratio higher than expected due to responses to rising costs and weather-related events. The fiscal policy remains more expansionary compared to other advanced economies (IMF).
Switzerland:
GDP Growth: Switzerland's economy is experiencing moderate growth with projections of around 1.5% for 2024. The economy remains stable, supported by robust industrial production and strong financial services sector (IMF) (FocusEconomics).
Employment Data: Switzerland boasts a low unemployment rate, consistently below 3.0%, reflecting a highly efficient labor market and strong demand for skilled labor (IMF).
Inflation Rates: Swiss inflation remains low, around 1.5%, which is well within the target range of the Swiss National Bank (SNB). The country's strong currency and stable economic environment contribute to subdued inflationary pressures (IMF).
Retail Sales: Retail sales in Switzerland have shown steady growth, driven by high consumer confidence and robust domestic consumption. The stable economic environment supports continuous retail sector expansion (IMF).
Trade Balances: Switzerland maintains a significant trade surplus, driven by high exports of pharmaceuticals, machinery, and financial services. The strong Swiss franc continues to support the country's trade balance (IMF).
Fiscal Policies: Switzerland's fiscal policy is characterized by prudence and sustainability. The government runs a budget surplus and maintains low public debt levels, ensuring long-term economic stability (IMF).
Daily Percentage Changes
Over the past month, the NZD/CHF exchange rate has experienced fluctuations driven by various economic data releases and market events. Key movements include:
Early May 2024: A decline in NZD following weak economic data from New Zealand, including lower-than-expected GDP growth figures.
Mid-May 2024: An increase in NZD driven by stronger retail sales and consumer confidence data, along with a slight improvement in inflation rates.
Late May 2024: Volatility due to geopolitical tensions and speculation around central bank policy decisions in both New Zealand and Switzerland (OECD) (IMF) (FocusEconomics).
News Analysis
Recent news impacting the NZD/CHF exchange rate includes:
RBNZ Announcements: The RBNZ's decision to maintain a tight monetary policy has led to periods of stability for the NZD (IMF) (Reserve Bank of New Zealand).
Swiss Economic Data Releases: Strong Swiss industrial production and low inflation have supported the CHF, contributing to its strength against the NZD (IMF) (FocusEconomics).
Geopolitical Developments: Global economic uncertainties and trade negotiations have influenced market sentiment and currency valuations (IMF) (FocusEconomics).
Interest Rate Expectations
RBNZ: The RBNZ is expected to maintain its current interest rate of 5.5% through 2024, with potential adjustments depending on inflation and economic growth trajectories (IMF) (Reserve Bank of New Zealand).
SNB: The Swiss National Bank is likely to keep interest rates low, around 1.5%, to support economic growth and maintain price stability. The SNB's cautious approach to monetary policy supports the stability of the CHF (IMF).
Commodity Prices and Market Sentiment
Dairy and Agricultural Products: New Zealand's economy heavily relies on exports of dairy and other agricultural products. Fluctuations in global demand for these commodities significantly impact the NZD (IMF).
Gold: As a safe-haven asset, gold prices influence the CHF. Strong gold prices support the CHF, reflecting its role as a stable currency in times of economic uncertainty (IMF).
Projection Figures
Based on current economic data and trends, the NZD/CHF exchange rate is projected to be around 0.57 by the end of June 2024. This projection considers stable commodity prices, steady interest rates, and moderate economic growth in both countries (IMF) (FocusEconomics).
Trade Ideas
Short-term: Consider going LONG on NZD/CHF at current levels (around 0.55) with a target of 0.57, based on expected improvements in New Zealand's economic indicators and steady Swiss economic performance.
Long-term: A cautious LONG position could be taken with a target of 0.58, assuming a gradual improvement in global economic conditions and positive impacts from fiscal policies in both countries (IMF) (FocusEconomics).
Current Price Consideration
As of now, the NZD/CHF is trading around 0.55. The projections and trade ideas are aligned with this current price, ensuring relevance and accuracy based on the latest economic data and market conditions (IMF) (FocusEconomics).
Additional Considerations
Global Macroeconomic Trends: The global economic outlook, particularly developments in major economies like China, will continue to influence the NZD/CHF pair.
Seasonal Trends: Historical data indicates that certain seasonal patterns may affect currency movements, which should be considered in the analysis.
By keeping these factors in mind, the provided projections and trade ideas aim to offer precise and realistic guidance based on thorough economic analysis.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.