Swiss Imports Drop 9.8% MoM: SNB Rate Cut Case Strengthens

Switzerland imports fell to CHF 19,188 million in April from CHF 21,282 million in March. The month-over-month decline of 9.8% is the steepest since at least the start of 2023. The previous month's reading was already revised lower from an initial estimate. The magnitude of the March-to-April swing caught most desk forecasts.

Import data is a direct proxy for domestic consumption and investment demand. A MoM drop of this size, if sustained, signals that Swiss households and businesses are pulling back on spending. The sharp deceleration reduces the risk of imported inflation. It gives the Swiss National Bank (SNB) more room to continue its easing cycle.

USD/CHF: The Rate Differential Channel

The SNB cut its policy rate by 25 basis points in March, the first cut in nine years, and signalled readiness to ease further if the franc strengthens excessively. A weakening domestic demand picture strengthens the case for a follow-up move at the next rate decision on June 25. Markets currently price roughly a 60% chance of another 25bp cut. The import data pushes that probability toward 70-75%.

A lower SNB rate narrows the interest rate differential between the franc and the dollar. That makes CHF carry trades less attractive. The typical response is a weaker franc, expressed as a higher USD/CHF exchange rate. The pair has been range-bound between 0.8950 and 0.9050 since early May. A clear break above 0.9050 on the back of dovish SNB expectations would open the path toward the 0.9150 area, the next technical resistance.