British Pound Sinks as Scottish Independence Poll Fuels Capital Flight

2014-09-08 06:24:00

Ilya Spivak, Sr. Currency Strategist

Talking Points:

British Pound Sinks as Scottish Independence Poll Sets Off Capital Flight
Swiss Franc May Decline if August Inflation Data Falls Short of Forecasts
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The British Pound tumbled against all of its major counterparts to start the trading week, losing as much as 0.9 percent on average. The move reflected capital flight amid uncertainty linked to the outcome of next week’s Scottish Independence referendum. A YouGov/Sunday Times poll published over the weekend showed those intending to vote in favor of seceding from the UK outnumbered those favoring the status quo for the first time, albeit by a narrow margin (47% for independence, 45% against, 7% undecided).

Looking ahead, a quiet economic in European trading hours offers little by way of market-moving event risk. Augusts’ Swiss CPI figures may draw attention however as persistent Euro weakness pushes EURCHF toward the SNB’s target floor of 1.20. The benchmark year-on-year inflation rate is expected to print flat, unchanged from the prior month. Leading survey data hints at a sharp slowdown in price growth however, opening the door for a downside surprise. That may fuel speculation that the SNB will need to expand stimulus, weighing on the Franc. We remain long USDCHF.

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Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
22:45	NZD	Mfg Activity Volume (QoQ) (2Q)	-0.7%	-	0.5%
22:45	NZD	Manufacturing Activity (2Q)	-1.9%	-	0.6%
23:50	JPY	Current Account Total (¥)	416.7B	444.2B	-399.1B
23:50	JPY	Adjusted Current Account Total (¥)	99.3B	180.1B	125.6B
23:50	JPY	Trade Balance - BOP Basis (¥)	-828.1B	-725.9B	-537.1B
23:50	JPY	GDP (QoQ) (2Q F)	-1.8%	-1.8%	-1.7%
23:50	JPY	GDP Annualized (2Q F)	-7.1%	-7.0%	-6.8%
23:50	JPY	Nominal GDP (QoQ) (2Q F)	-0.2%	-0.1%	-0.1%
23:50	JPY	GDP Deflator (YoY) (2Q F)	2.0%	2.0%	2.0%
23:50	JPY	GDP Consumer Spending (QoQ) (2Q F)	-5.3%	-5.0%	-5.2%
23:50	JPY	GDP Business Spending (QoQ) (2Q F)	-5.1%	-3.4%	-2.5%
23:50	JPY	Bank Lending incl Trusts (YoY) (AUG)	2.3%	-	2.2%
23:50	JPY	Bank Lending Banks ex-Trust (AUG)	2.3%	-	2.3%
1:30	AUD	ANZ Job Advertisements (MoM) (AUG)	1.8%	-	0.5%
2:00	CNY	Exports (YoY) (AUG)	9.4%	9.0%	14.5%
2:00	CNY	Imports (YoY) (AUG)	-2.4%	3.0%	-1.6%
2:00	CNY	Trade Balance (AUG)	$49.83B	$40.00B	$47.30B
4:30	JPY	Bankruptcies (YoY) (AUG)	-11.23%	-	-13.95%
5:00	JPY	Eco Watchers Survey: Current (AUG)	47.4	51.0	51.3
5:00	JPY	Eco Watchers Survey: Outlook (AUG)	50.4	-	51.5

European Session

GMT	CCY	EVENT	EXP/ACT	PREV	IMPACT
5:45	CHF	Unemployment Rate (AUG)	3.0% (A)	2.9%	Medium
5:45	CHF	Unemployment Rate s.a. (AUG)	3.2% (A)	3.2%	Medium
6:00	EUR	German Labor Costs (YoY) (2Q)	1.7% (A)	0.5%	Low
6:00	EUR	German Labor Costs (QoQ) (2Q)	0.7% (A)	-0.1%	Low
6:00	EUR	German Trade Balance (€) (JUL)	23.4B (A)	16.6B	Medium
6:00	EUR	German Current Account (€)(JUL)	21.7B (A)	17.2B	Low
6:00	EUR	German Imports s.a. (MoM) (JUL)	-1.8% (A)	4.5%	Low
6:00	EUR	German Exports s.a. (MoM) (JUL)	4.7% (A)	0.9%	Low
7:00	EUR	Halifax House Prices (MoM) (AUG)	0.3%	1.4%	Low
7:00	EUR	Halifax House Prices (3M/Y) (AUG)	10.0%	10.2%	Low
7:15	CHF	Consumer Price Index (MoM) (AUG)	-0.1%	-0.4%	Medium
7:15	CHF	Consumer Price Index (YoY) (AUG)	0.0%	0.0%	Medium
7:15	CHF	CPI - EU Harmonized (MoM) (AUG)	-	0.0%	Low
7:15	CHF	CPI - EU Harmonized (YoY) (AUG)	-	-0.1%	Low
7:15	CHF	Retail Sales (Real) (YoY) (JUL)	-	3.4%	Medium
8:30	GBP	Lloyds Employment Confidence (AUG)	-	6	Low
8:30	EUR	Eurozone Sentix Investor Confidence (SEP)	1.4	2.7	Low