Currencies May Move More on US Retail Sales Data vs. BOE, SNB
- Pound probably won’t find lasting catalyst in BOE policy announcement
- SNB rate decision likely another non-event but vigilance seems prudent
- US Dollar looks to Retail Sales data to inform Fed rate hike speculation
The Bank of England rate decision seems unlikely to inspire a strong reaction from financial markets. Governor Mark Carney and company laid out the case for a wait-and-see stance in testimony before Parliament’s Treasury Select Committee last week, revealing most everything that would have been market-moving in today’s announcement. The vote tally on the rate-setting MPC committee may be noteworthy in the event of a break from unanimity, but significant follow-through from the British Pound seems unlikely.
The Swiss National Bank is also due to make its monetary policy announcement. Headline and core measures of inflation have steadily recovered since the beginning of the year. Indeed, realized outcomes on measures of price growth have increasingly outperformed relative to market economists’ expectations in 2016. Meanwhile, the benchmark EUR/CHF exchange rate has trended cautiously higher since the last central bank meeting in mid-June. On balance, this suggests policymakers probably don’t feel an urgent need for further action at this point.
With that in mind, it is important to remember that the SNB operates quite differently from other major central banks. This is the monetary authority that unceremoniously abandoned a floor of 1.20 on EUR/CHF just days after claiming it as an essential pillar of policy, after all. As such, vigilance seems prudent despite the seemingly low probability of a change in posture. The quarterly update of the central bank’s inflation forecast may also prove noteworthy, particularly if a major revision fuels speculation of a policy adjustment on the horizon in the near term.
The spotlight will turn to US Retail Sales data later in the day. Receipts are expected to edge down 0.1 percent in August having registered flat in the prior month. US economic news-flow has increasingly disappointed relative to consensus forecasts since late July. More of the same this time around may weigh against Fed rate hike bets spurred on by hawkish comments from FOMC officials over recent weeks. Such a result is likely to bode ill for the US Dollar while yield-sensitive alternatives in the commodity bloc see outsized gains. Needless to say, an upside surprise will probably send the greenback upward.
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|22:30||NZD||BusinessNZ Manufacturing PMI (AUG)||55.1||-||55.5|
|22:45||NZD||GDP SA (QoQ) (2Q)||0.9%||1.1%||0.9%|
|22:45||NZD||GDP (YoY) (2Q)||3.6%||3.6%||3.0%|
|01:00||AUD||Consumer Inflation Expectation (SEP)||3.3%||-||3.5%|
|01:30||AUD||Employment Change (AUG)||-3.9k||15.0k||25.3k|
|01:30||AUD||Unemployment Rate (AUG)||5.6%||5.7%||5.7%|
|01:30||AUD||Full Time Employment Change (AUG)||11.5k||-||-46.1k|
|01:30||AUD||Part Time Employment Change (AUG)||-15.4k||-||69.6k|
|01:30||AUD||Participation Rate (AUG)||64.7%||64.9%||64.9%|
|01:30||AUD||New Motor Vehicle Sales (MoM) (AUG)||0.1%||-||-1.4%|
|01:30||AUD||New Motor Vehicle Sales (YoY) (AUG)||2.9%||-||1.3%|
|01:30||AUD||RBA FX Transactions Government (AUG)||-657m||-||-463m|
|01:30||AUD||RBA FX Transactions Market (AUG)||607m||-||444m|
|01:30||AUD||RBA FX Transactions Other (AUG)||67m||-||48m|
|06:00||EUR||EU27 New Car Registrations (AUG)||-||6.9%||Low|
|07:30||CHF||SNB 3-Month Libor Lower Target Range (SEP 15)||-1.25%||-1.25%||High|
|07:30||CHF||SNB 3-Month Libor Upper Target Range (SEP 15)||-0.25%||-0.25%||High|
|07:30||CHF||SNB Sight Deposit Interest Rate (SEP 15)||-0.75%||-0.75%||High|
|08:30||GBP||Retail Sales Ex Auto Fuel (MoM) (AUG)||-0.7%||1.5%||Medium|
|08:30||GBP||Retail Sales Ex Auto Fuel (YoY) (AUG)||4.8%||5.4%||Medium|
|08:30||GBP||Retail Sales Inc Auto Fuel (MoM) (AUG)||-0.4%||1.4%||Medium|
|08:30||GBP||Retail Sales Inc Auto Fuel (YoY) (AUG)||5.4%||5.9%||Medium|
|09:00||EUR||Eurozone Trade Balance SA (JUL)||22.0b||23.4b||Low|
|09:00||EUR||Eurozone Trade Balance NSA (JUL)||29.6b||29.2b||Low|
|09:00||EUR||Eurozone CPI (MoM) (AUG)||0.1%||-0.6%||Medium|
|09:00||EUR||Eurozone CPI (YoY) (AUG F)||0.2%||-||Medium|
|09:00||EUR||Eurozone CPI Core (YoY) (AUG F)||0.8%||0.8%||Medium|
|11:00||GBP||Bank of England Bank Rate (SEP 15)||0.25%||0.25%||High|
|11:00||GBP||BOE Asset Purchase Target (SEP)||435b||435b||High|
|CCY||Supp 3||Supp 2||Supp 1||Pivot Point||Res 1||Res 2||Res 3|
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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