- The USD/CHF pair is little changed after SECO released better than expected unemployment rate numbers.
- The country's unemployment rate dropped from the previous 3.4% to 3.2% as the country reopened.
- The numbers show that Swiss economy is making a modest recovery as coronavirus cases fall.
The USD/CHF pair is little changed today even after the Secretariat for Economic Affairs (SECO) released upbeat employment numbers. The pair is trading at 0.9428, which is slightly higher than this week’s low of 0.9385.
Switzerland unemployment rate falls
The Switzerland unemployment rate declined in June as the country continued to reopen its economy. According to SECO, 150,289 people registered at the regional employment centres. That was 5,709 fewer than those reported in the previous month. As a result, the unemployment rate declined from the previous 3.4% to 3.2%. Analysts polled by Reuters were expecting the rate to remain at 3.4%.
According to the bureau, youth unemployment declined by 441 people. The rate among those between 50 and 64 declined by 1,206 people. At the same time, there were more than 233,454 job seekers, which was higher than the previous month.
These numbers show that the Swiss economy is in a better than most countries. For example, in the United States, the unemployment ratehas dropped to 11% while in the Eurozone, the rate has jumped to 7.4%. Youth unemployment rate in the bloc is more than 15%.
This discrepancy is mostly because of the measures the government put in place in its response to the coronavirus pandemic. To date, the government has launched a stimulus package worth more than CHF 60 billion, according to KPMG.
Most of these funds were mostly aimed at safeguarding jobs, guaranteeing wages to employees, and supporting self-employed people. For example, the government compensated self-employed people for loss of earnings and gave loss allowances to employees. As a result, unlike in the United States, firms had minimal incentive to lay-off workers.
The Swiss National Bank (SNB) also acted to provide liquidity to businesses and left interest rates at historic lows. Also, the recent strength of the franc increases the possibility that the bank will push interest rates deeper into the negative territory.
The falling number of coronavirus cases in Swizterland have supported the economy. According to Worldometer, the number of daily infections has dropped to less than 50. That is a sharp decline from the March high of more than 1,300.
Also, demand from key markets has supported the economy. As an export-oriented economy, recent upbeat economic data from China, Europe, Australia, and the US mean that demand is rising. However, it will take a longer period for growth to completely recover.
According to SECO, the economy will decline by 6.2% this year, the worst decline in decades. The agency expects the unemployment rate to rise to 3.8%.
USD/CHF technical analysis
The USD/CHF pair is trading at 0.9425. On the daily chart, this price is below the 50-day and 100-day exponential moving averages. The price is also between the 23.6% and 38.2% Fibonacci retracement level. It is also along the pink descending trend line. Therefore, the pair is likely to continue falling as bears attempt to move below 0.9400.