Switzerland’s trade balance increased to 4,204M in February from 3,818M in the previous period.
This marks a rise of 386M compared with the earlier figure.
The February trade surplus grew to 4.2 billion francs, which points towards robust export demand and fundamental strength in the Swiss economy. This positive surprise suggests the Swiss franc (CHF) is well-supported. We should anticipate further strength in the currency in the coming weeks.
This strength is not surprising when we see the details, with global demand for Swiss pharmaceuticals and watches continuing to drive exports. Recent data shows Swiss watch exports to Asia rose by over 6% year-over-year, a trend that reinforces this trade balance figure. This suggests the surplus is based on solid, ongoing business rather than a one-time event.
For currency traders, this means we should look at buying call options on the CHF, particularly against the euro and dollar. The EUR/CHF pair, which has been hovering around 0.9650, could see a decisive break lower towards 0.9500. Selling puts on the franc could also be a way to position for its underlying strength.
This strong economic data will likely force the Swiss National Bank (SNB) to remain on hold. We remember the franc weakening after the rate cuts back in 2024 and early 2025, but this trend may now be reversing. Any expectations for another rate cut in the second quarter should be scaled back significantly.
For the Swiss Market Index (SMI), the outlook is more complex. A stronger franc can be a headwind for the large multinational exporters that dominate the index, as it hurts their overseas earnings. We should consider that while the economy is strong, this currency effect could put a cap on stock market gains for now.
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