Swiss Franc Surges On Strong Retail and Manufacturing Data

The Swiss franc surged against major currencies on Wednesday after the Swiss economy produced a number of strong economic results. The Swiss manufacturing activity rose unexpectedly in May. The research showed that the manufacturing activity index rose to 59.20 in May from 58.40 in April. Most analysts were expecting manufacturing activity to slow down to 57.60. Further signs of strong fundamentals in the Swiss economy could be found in its retail sector. According to the Federal Statistics Office data, the Swiss retail sales surged 0.7% in April compared to a month earlier, following a 0.4% rise in March. On a yearly basis, the April retail sales were 7.5% higher than in April 2010. Strong results by the Swiss economy provided more steam to the Swiss currency, as the franc surged against the euro, the U.S. dollar and the British pound. At around 9 am GMT, the euro lost 0.58% of its value against the franc to trade at 1.2223, while the U.S. dollar traded at around 0.84860, or 0.64% below yesterday's close. The biggest loser was the pound, however, falling 0.87% to 1.3914. The Swiss economy has been outperforming that of other developed nations, providing a boost to its currency. The franc also benefited from the uncertainties with respect to fragile global recovery, since the franc is traditionally considered a safe-heaven for investors in times of crisis and uncertainties. Traders who believe the strong Swiss economy and global uncertainties will contribute to the rising value of the franc will be interested in the CurrencyShares Swiss Franc Trust ETF FXF. Other Investors will be cautious about placing their money into the rising franc. The Swiss economy is export-driven and the strong franc is making Swiss exporters less competitive. The Swiss currency is already trading near its highest point against the U.S. dollar since the 1970s and is threatening to reach parity with the euro. Some traders will believe this is as much as the Swiss franc can go. These traders will be more interested in the ETFS Short Swiss Franc Long US Dollar ETC ETF (SCHF).