"The SNB has concluded the sustained strong increase in mortgage loans and the prices of Swiss residential properties has caused the imbalances to become even greater in the current low interest-rate environment."
- The Swiss government
The U.S. Dollar– Swiss Franc cross has been in ascent thus far this week, bouncing back from this month's low of 0.8901. However, it is too early to speak about a sustainable rally, until the pair breaks 0.9009. As always, the pair is mostly driven by fundamental news form the world's largest economy rather than the Alpine country. Even though the pair inched lower to 0.897 on the back of stronger-than-expected data from Switzerland, the outlook for the pair is still bullish, keeping in mind the upcoming FOMC meeting.
A monthly report from the UBS bank showed a gauge of consumption trends increased to 1.81 points in December, compared with 1.4 points a month earlier, with the main upside pressure coming from the number of new car registration and stronger demand at retailers. The bank said all of the sub-indicators improved over the corresponding period. What is more important, the measure of business conditions in retail trade rocketed 12 points, hitting the highest level since May 2011.
While consumer and producers prices are still struggling to grow, stronger domestic consumption can boost economic growth. Currently, the government projects a 2.3% for 2014 and a 2.7% growth in 2015. These forecasts and bold statements from Swiss authorities raised speculations the cap on the Swiss Franc will be removed soon.
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