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Swiss KOF Leading Indicator supports growth

The Swiss KOF leading indicator and German CPI spearhead the macro data agenda Friday, but it's a light calendar in the aftermath of the US Thanksgiving holiday.

The Swiss economy has rebounded sturdily in 2010 on accelerating global trade, which has sent the EUR/CHF tumbling by 10% so far this year. While this enables Swiss consumers to buy cheaper goods in the eurozone economies, the side effect will likely be weaker net exports in the coming quarters, which will weigh on GDP. The Swiss KOF Leading Indicator does, however, support higher growth in the last two quarters of 2010 before GDP YoY stagnates. Consensus looks for a slight decline to 2.11 from 2.17.

German consumer prices rose 1.3% in November from a year ago, according to consensus, which sees inflation stagnate relative to October. Germany has seen very weak inflation in the ongoing expansion, which trails the eurozone in general, and despite the continuing growth in manufacturing we do not expect any material pick-up in inflation anytime soon.

While action this week has fizzled out due to Thanksgiving, next week promises to be much more exciting with several key indicators including US ISM Manufacturing and the mammoth US Employment report.

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