SNB keeps policy steady but tweaks language on FX; now sees franc as highly valued compared to significantly over-valued; negative interest rates and FX intervene

options seen as essential in order to reduce the attractiveness of the currency

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Focus on BOE rate decision and minutes to see whether the case has been built for more hawks to show their feathers



Australia Aug Employment Change: +54.2K v +20.0Ke v 27.9K prior; Unemployment Rate: 5.6% v 5.6%e

China Aug Industrial Production Y/Y: 6.0% v 6.6%e

China Aug Retail Sales Y/Y: 10.1% v 10.5%e

Korea Asia-Pacific Peace Committee (North Korea propaganda outlet): Let us reduce US mainland into ashes and darkness; Japan is no longer needed to exist near us


Bank of Italy (BOI Paper: Adjustment in path of prices in Euro Area is still limited and far from sustained

BOE’s Cunliffe: UK banking sector is stronger than it was before the crisis. BoE looking very closely at consumer lending and some credit card practices to see if there are risks to financial system. Would act if Bank’s Brexit plans pose risks to financial stability

UK govt spokesperson: PM May will make a speech about Britain’s future relationship with EU on Sept 22nd, in Florence Italy


President Trump agreed with CFIUS recommendation to block Lattice merger with China’s Canyon Bridge Fund citing national security issues

China Commerce Ministry (MOFCOM): Very concerned by Trump’s blocking of China deal; security checks shouldn’t be used as a protectionism tool

Economic data

(FI) Finland Aug CPI M/M: +0.3 v -0.3% prior; Y/Y: 0.7% v 0.5% prior

(EU) Aug EU27 New Car Registrations: 5.6% v 2.1% prior

(IN) India Aug Wholesale Prices (WPI) Y/Y: 3.2% v 3.2%e

(FR) France Aug Final CPI M/M: 0.5% v 0.5%e; Y/Y: 0.9% v 0.9%e

(FR) France Aug Final CPI EU Harmonized M/M: 0.6% v 0.6%e; Y/Y: 1.0% v 1.0%e, CPI Ex-Tobacco Index: 101.47 v 101.47e

(CH) Swiss National Bank (SNB) left the Sight Deposit Rate unchanged at -0.75% and maintained the 3-Month Libor Range between -0.25 to -1.25% (as expected) 6.6% prior; Unemployment Rate (SAeasonally Adj): 6.6% v 6.8%e

(IT) Italy Aug Final CPI (including Tobacco) M/M: 0.3% v 0.3% prelim; Y/Y: 1.2% v 1.2% prelim

(IT) Italy Aug Final CPI EU Harmonized M/M: 0.1% v 0.1% prelim; Y/Y: 1.4% v 1.4% prelim, CPI FOI Index ex Tobacco: No est v 101.0 prior

(ZA) South Africa Q2 Current Account Balance (ZAR): -110B v -88Be; Current Account to GDP ratio: -2.4% v -1.9%e

Fixed Income Issuance:

(SE) Sweden sold total SEK750M in I/L 2026 and 2027 Bonds

(IE) Ireland Debt Agency (NTMA) sold total €1.0B vs. €1.0B indicated in 2026 and 2037 IGB Bonds

Sold €550M in 1.0% May 2026 IGB bond; Avg Yield: 0.6894% v 0.7200% prior; Bid-to-cover: 2.55x v 2.25x prior

Sold €450M in 2037 IGB bonds; Avg Yeild: 1.6482%; Bid-to-cover: 1.74x



Indices [Stoxx600 -0.1% at 381.0, FTSE flat at 7381, DAX -0.3% at 12519, CAC-40 -0.1% at 5212, IBEX-35 -0.6% at 10312, FTSE MIB flat at 22233, SMI +0.1% at 9064, S&P 500 Futures -0.1%]

Market Focal Points/Key Themes:

European Indices trade little changed with the exception of the Spanish Ibex trading lower by over 0.5%. The UK FTSE trades flat ahead of the BoE Rate decision later today, with shares of Fashion retailer Next outperforming after raising guidance, whilst Morrison shares trade sharply lower following first half results. Miners weigh after disappointing data from China. Elsewhere Interserve trades over 40% lower after a profit warning, on the other hand GVC trades higher after guiding EBITDA comfortable ahead of forecasts.


Consumer discretionary [Next [NXT.UK] +12.4% (Earnings), Hermes [RMS.UK] -2.1% (Earnings), GVC [GVC.UK] +3.8% (Earnings)]

Consumer Staples: [Morrisons [MRW.UK] -4.3% (Earnings)]

Industrials: [Interserve [IRV.UK] -47% (Profit warnings), GKN [GKN.UK] +3.3% (Board changes)]

Healthcare: [Spire Healthcare [SPI.UK] -16% (Earnings)]


SNB policy Statement: CHF currency (Franc) remained highly valued (tweaked language from formerly significantly overvalued). Reiterated would remain active in FX markets and intervene if necessary as the situation remained fragile. To continue to monitor situation in mortgage and property market and would regularly assess countercyclical capital buffer

ECB’s Jazbec (Slovenia): ECB QE tapering decision postponed but inevitable; strong euro reflects robust euro area economy. Euro Area has macro-prudential policy dilemma of whether policies should be taken at a European level or the national level

ECB’s Smets (Belgium): Inflation might have bottomed out

Sweden Central Bank (Riksbank) Jansson: Latest inflation data being above target was comforting but too early to make policy less expansionary

Poland Central Bank Zyzynski: Might need to keep policy steady through 2018 or even longer

Turkey Fin MIn Agbal: 2017 GDP growth to be higher than mid-term target; could be over 5% for year. Q3 GDP growth above Q2 level. Interest rates to fall with lower CPI

Italy Business industry lobby Confindustria raised its 2017 and 2018 GDP growth forecasts (2017 Growth from 1.3% to 1.5% and 2018 Growth from 1.1% to 1.3%)

OECD: Forecasts France 2017 GDP growth at 1.7% and 2018 at 1.6%. France needed long-term strategy to cut public spending. Pension spending was too high while retirement age too low

Chancellor of Exchequer Hammond (Fin Min): UK government will aim for a "bespoke" deal with the EU to protect the City of London after Brexit. Financial services are the UK’s most important export to the EU


SNB amended its rhetoric on the currency front but analysts believed that recent depreciation of the Swiss franc was not a reason to change the central bank’s stance on FX and become more relaxed. EUR/CHF probed towards the 1.15 handle despite the SNB noted CHF currency (Franc) remained highly valued (tweaked language from formerly significantly over-valued). SNB obviously welcomed the recent weakening, but they would appreciate it if this trend continued

The main focus of the US morning will be the BOE rate decision and in the vote of the MPC on rates. GBP/USD recently tested above1.33 level on expectations that the BoE will turn up the dial on its hawkish rhetoric in an attempt to convince markets about the possibility of a rate rise at some point in the not too distant future BOE is back to full strength of 9 members as Ramsden joined the Board. Members McCafferty and Saunders have previously dissented at the last two decisions. In the past the chief economist Haldane seemed poised to join the hawks. CPI data has been edging towards 3% in recent months and well above the BOE target of 2%. However, recent wage data foreshadowed that personal consumption might remain subdued and thus keep BOE’s hands tied for some time ahead

Fixed Income

Bund futures trade at 161.81 up 5 ticks and still near the 2-month lows. Continued downside targets 161.42 while upside resistance stands initially at 163.27.

Gilt futures trade at 127.06 down 6 ticks after breaking below the 127.30 support level; the focus remains on the BOE. Continued downside eyeing 126.88, then 126.25. Upside targets 128.90 then 129.24.

Looking Ahead

05:30 (PL) Poland holds switch auction

06:00 (IL) Israel Q2 Current Account: No est v $2.5B prior

06:45 (US) Daily Libor Fixing

07:00 (UK) Bank of England (BOE)Interest Rate Decision: Expected to leave interest rates unchanged at 0.25%

07:00 (UR) Ukraine Central Bank Interest Rate Decision: Expected to leave Key Rate unchanged at 12.50%

07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision: Expected to leave all key rates unchanged

07:00 (BR) Brazil Sept FGV Inflation IGP-10 M/M: +0.4%e v -0.2% prior

07:30 (BR) Brazil July Economic Activity Index (Monthly GDP) M/M: 0.1%e v 0.5% prior; Y/Y: +0.8%e v -0.6% prior

08:05 (UK) Baltic Dry Bulk Index

08:30 (US) Initial Jobless Claims: 300Ke v 298K prior; Continuing Claims: 1.97Me v 1.940M prior

08:30 (US) Aug CPI M/M: 0.3%e v 0.1% prior; Y/Y: 1.8%e v 1.7% prior

08:30 (US) Aug CPI Ex Food and Energy M/M: 0.2%e v 0.1% prior; Y/Y: 1.6%e v 1.7% prior

08:30 (US) Aug CPI Index NSA: 245.343e v 244.786 prior; CPI Core Index: 252.336e v 251.914 prior

08:30 (US) Aug Real Avg Weekly Earnings Y/Y: No est v 1.1% prior; Real Avg Hourly Earning Y/Y: No est v 0.7% prior

08:30 (CA) Canada July New Housing Price Index M/M: 0.4%e v 0.2% prior; Y/Y: No est v 3.9% prior

08:30 (US) Weekly USDA Net Export Sales

09:00 (RU) Russia Gold and Forex Reserve w/e Sept 8th: No est v $423.1B prior

09:50 (UK) Chancellor of Exchequer Hammond (Fin Min) in Budapest

10:30 (US) Weekly EIA Natural Gas Inventories

11:00 (BR) Brazil to sell Fixed Rate 2023 and 2027 Bonds

11:00 (BR) Brazil to sell 2018, 2019 and 2021 LTN Bills

11:30 (DE) ECB’s Weidmann (Germany) in Frankfurt

12:00 (IS) Iceland Aug International Reserves (ISK): No est v 670B prior

12:00 (LX) ECB’s Mersch (Luxembourg) in Estonia

14:10 (DE) German Chancellor Merkel at town hall event

15:00 (AR) Argentina Q2 Unemployment Rate: No est v 9.2% prior

17:00 (CL) Chile Central Bank (BCCH) Interest Rate Decision: Expected to leave Overnight Rate Target unchanged at 2.50%

19:00 (PE) Peru Central Bank (BCRP) Interest Rate Decision: Expected to leave Reference Rate unchanged at 3.75%

Previous articleBoE Decision And US Inflation Data In Focus
Next article(BOE) Bank Rate Held at 0.25%, Government Bond Purchases at £435bn and Corporate Bond Purchases at up to £10bn
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