Switzerland’s KOF index rises to 101.1 in July, surpassing expectations and signaling improved economic sentiment
by VT Markets
/
Jul 30, 2025
The KOF leading indicator for Switzerland in July is 101.1. This is higher than the expected 97.5 and up from the revised previous value of 96.3.
This is the highest level since March 2025, showing a boost in Swiss economic sentiment. The data points to a positive outlook, indicating stronger confidence in the economy.
Strong KOF Indicator
The strong KOF indicator means the Swiss economy is growing faster than expected. This is a big surprise and the highest reading since March. It suggests that the Swiss franc may strengthen in the coming weeks.
This optimism seems connected to a better global trade picture, not just local factors. For example, Germany’s IFO Business Climate Index hit a 10-month high of 92.5 last week. This matches China’s Caixin Manufacturing PMI, which has shown steady factory growth for three months, currently at 51.9.
This new information presents a challenge for the Swiss National Bank (SNB). They cut interest rates in March and June 2025 to control the franc’s strength. With this strong economic signal, they might need to adjust their approach in their next meeting.
Investment Strategy
Considering this, we see good opportunities in buying call options on the Swiss franc against the euro or the dollar. This strategy allows us to benefit if the franc strengthens due to the positive economic outlook. It also limits our losses if the SNB successfully talks down the currency or if global sentiment changes suddenly.
The key point is volatility, which may increase as the market speculates on the SNB’s next move. One-month implied volatility on EUR/CHF has already risen to 6.8%, and we believe it could rise further based on what we observed in 2022-2023 when central bank policies differed significantly. A simple long call strategy on the franc, or possibly a call spread to reduce costs, looks appealing right now.
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by VT Markets
Jul 30, 2025
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