-Eric Tannenbaum, Moody's Analytics
Producer prices in Switzerland declined for a second consecutive month in September. The Swiss Federal Statistical Office reported its PPI fell by a seasonally adjusted 0.1% last month, in line with predictions, following a decline of 0.2% in August. On an annual basis, the producer price index dropped 1.4% in September, in line with market consensus, after falling 1.2% in August. Meanwhile, the Swiss Franc strengthened versus the single currency as concerns over the Euro zone's recovery, which has been recently questioned especially after disappointing German ZEW survey, are growing and weighing on traders to turn to safe haven assets. The Franc approached a two-week high on Tuesday, rising 0.14% to 1.2071, the highest level since October 2.
The Swiss Franc has been under a managed regime since September 2011, when the Swiss National Bank set a minimum exchange rate cap of the Euro versus the Franc at 1.20 to prevent macroeconomic imbalances caused by excessive strengthening of the nation's currency given its safe-haven status at times of volatility on global financial markets. The SNB is likely to keep its cap on the Franc in place until at least 2016 as central bank governors in the neighbouring Euro area loosen policy further.
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