The euro fell against the Swiss franc yesterday following the release of extremely weak Eurozone manufacturing PMI data for September. Notably, the Swiss retail sales data for August was also unimpressive. However, the market was focused on the Eurozone, as the economic data from that region has wider implications. Overall, the EUR/CHF pair declined from a high of 0.9685 to a low of 0.9615 in the past 24 hours.
According to the Federal Statistical Office, Swiss retail sales fell by 1.80% y-o-y in August, following a 2.50% decline in the previous month and line with economists’ estimates.
Excluding service stations, retail sales inched 0.40% y-o-y in August 2023.
Retail sales of food, drinks, and tobacco posted a growth of 2.10% y-o-y in August. However, the non-food sector recorded a 1% increase.
Excluding service stations, the retail sector recorded an increase of 0.30% m-o-m in August. While retail sales of food, drinks, and tobacco reported a rise of 0.90%, the non-food sector inched an increase of 0.10%.
The Swiss procure.ch and Credit Suisse Manufacturing PMI (purchasing managers’ index) improved to 44.90 in September from 39.90 in August and surpassed forecasts of 40.60. Notably, a reading below 50 indicates contraction, and vice versa. The reading indicates the ninth successive month of contraction.
The production index increased 9.40 points to 48.50 in September. Likewise, the order book index rose by 8.80 points to 42.30. While the purchasing volume index inched up 2.30 to 33.90, the employment index grew by 2.30 points to 50.60. However, the delivery times index inched down by 0.20 points to 37.20.
The Hamburg Commercial Bank (HCOB) and S&P Global Eurozone final manufacturing PMI hit a two-month low of 43.40 in September, following a reading of 43.50 in August. Initial estimates had pegged the reading at 43.40. Economists did not anticipate any change in the flash data. Notably, this is the 15th successive month in which the reading has been below 50, signaling a continuous decline in the health of the Eurozone manufacturing industry.
The HCOB Eurozone manufacturing PMI output index hit a two-month low of 43.10 in September from 43.40 in August.
Yet again, the volume of fresh orders declined in the Eurozone. Specifically, the pace of decline was the steepest in the 26-year survey history. The sluggish demand ensured a decrease in backlogs of work. Particularly, the pace of decrease was the quickest since May 2020. Additionally, purchasing activity fell for the 15th successive month. Eventually, September survey data highlighted a considerable softening of growth forecasts as business optimism hit a 10-month low.
According to Eurostat, the Eurozone unemployment rate inched lower to 6.40% in August from 6.50% in July, in line with economists’ estimates.
The number of employed individuals in the Eurozone was 10.856 million in August. Compared with July, unemployment fell by 107,000 in the Eurozone.
Compared with August 2022, unemployment declined by 407,000 in the Eurozone.
The weak economic data from the Eurozone and Switzerland is expected to keep the EUR/CHF pair range-bound in the short term.
The historical price chart indicates that the EUR/CHF pair is declining after facing resistance at 0.9685. The next major support is anticipated to be only near 0.9565. Additionally, the currency pair is trading below its 50-day moving average, while the stochastic indicator is in the bearish zone. Therefore, we anticipate the EUR/CHF pair to remain in a downtrend in the near term.
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