Global macro overview for 30/10/2017

Global macro overview for 30/10/2017:

The reading from a month ago was at the level of 105.8 and this month reading was released at the level of 109.1.This is the second upward movement in succession. The upward tendency is mainly driven by the banking and manufacturing indicators. However, the prospects for exports and the accommodation and food service activities are also somewhat better than before. The indicators for domestic consumption are stagnating, and the indicators for the further development of the construction sector have declined somewhat. Regarding tot he manufacturing, the indicators for machinery, metal, electrical equipment, paper and other manufacturing industries are pointing upwards.

The Swiss economy is performing well and Autumn is welcoming it with a tailwind. The SNB is far from lifting borrowing rates and the current level of negative interest rates at -0.75% might stay here a little longer despite the recent European Central Bank announcement of a reduction of the monthly asset purchase of €30bn per month (which is clearly tightening, while at the same time sounding dovish).

Let's now take a look at the EUR/CHF technical picture at the H4 time frame. The further upside EUR/CHF is quite limited in the short-term as market participants are progressively adopting a more bearish bias on the pair. In addition, the Catalan crisis reminded everybody that the European Union is not as united as Brussels says. On the other hand, there is little incentive for investors to bet on a sharp reversal in EUR/CHF as monetary policy divergence is clearly in favor of Euro. The recent bounce from the level of 1.1557 might be short-lived if the Catalan tensions will escalate.

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