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Franc sliding, Swiss economy smiling

The latest assessment of the Swiss economy from the Kof institute has produced an index reading of 106.8 for July, above last month’s 105.8 and comfortably ahead of forecasts – a shift that will likely be reinforced by the new slide in the franc.

Kof said the “outlook for the Swiss economy remains favourable” with the strongest drivers coming from the tourist industry and exports.

Though the franc has been edging lower since the start of this year, this latest assessment will capture little of the currency’s abrupt slide this week, which reflects broad strength in the euro as well as the upbeat tone to global markets that dents the appeal of the safe-retreat franc. (For more on cheerful markets, check out our Facebook Live video with the FT’s John Authers.)

Kit Juckes at Société Générale writes:

The man of the moment yesterday was Thomas Jordan, whose SNB is finally feeling some relief after years of making up Switzerland’s inability to recycle its vast current account surplus. The euro’s back in fashion and that helps enormously. The result is that Swiss money market rates can edge back up and the euro is on its way to key resistance at SFr1.1350 and an end-year target of 1.15. The move demonstrates how little power the SNB has over the franc, but that shouldn’t detract from the relief – as long as the move keeps going.

At pixel time, the euro is at SFr1.1320, up by 0.5 per cent on the day.