Date: 19 Jul 2018

France may have lifted the Jules Rimet trophy but Switzerland was also a big winner from this year’s World Cup. Data released on May 31 by the Swiss Secretariat for Economic Affairs (SECO) showed Swiss gross domestic product grew 0.6 per cent in Q1 2018 from Q4 2017, above the 0.5 per cent increase that had been forecast by economists polled by Reuters, but that the figure would have been 0.4 per cent without the impact of two major sporting events, namely the Winter Olympics and football’s World Cup. With the International Olympic Committee headquartered in Lausanne and FIFA in Zurich, licensing and television fees related to tournaments under both their control are paid into Switzerland and so boost Swiss GDP. In itself, that’s an interesting fact but it also helps emphasize an aspect of the Swiss economy which wouldn’t normally be so visible, namely that capital inflows related to the profusion of multi-national organizations headquartered in Switzerland can be material. And of course those flows will end up in CHF and, by extension, help to shore up the view of the Swiss franc as a safe haven currency. In contrast, and arguably due to its own economic vulnerability to rising China-US trade tensions (given Japanese corporate exposure in China as well as the levying of US tariffs on Japanese steel and aluminium exports to the United States), the yen, often regarded by market participants itself as a safe haven, has lost some of its shine recently. In the battle of the safe havens, if China-US trade tensions continue to be ratcheted up, traders might start to wonder if CHFJPY could rise.