Investors' Focus Will be on Europe

In the euro area, the EU commission will reveal against which countries it recommends opening an excessive deficit procedure (EDF) due to breaches of the EU fiscal rules. The Commission will most likely recommend opening an EDP against France, which is to be expected due to France's public finances.

Inflation in UK Hit BoE 2% Inflation Goal

Inflation in the UK hit the Bank of England’s (BoE) 2% inflation goal and fueled speculation that the BoE could announce a surprise rate cut when it meets tomorrow. Sterling’s kneejerk reaction was surprisingly positive, however. There is little chance that tomorrow will bring a rate cut in the UK (as inflation is expected to head back to 2.5% in H2) but the thought of it could keep sterling bulls under control until tomorrow’s MPC decision.

UK Inflation Back at 2% But Services Inflation Remains a Concern, GBP/USD Rises

The Bank of England (BoE) will likely have mixed feelings this morning following the release of the May inflation report. Inflation has hit the Central Bank’s 2% target for the first time in nearly 3 years but the gap between goods and services inflation is a concern.

USD/CHF – Flat Ahead of SNB Rate Decision

The Swiss franc is almost unchanged on Wednesday. USD/CHF is trading at 0.8838 in the North American session, down 0.04% on the day.

CHF: Getting Bid Up Due to Safe Haven Status

During the first quarter of 2024, the Swiss franc has tumbled against most of the G-10 currencies, especially against the US dollar where it underperformed the worst with a current year-to-date intraday loss of 7.3% printed on 27 March.

NZ First Impressions: GDP, March Quarter 2024

The New Zealand economy skirted another decline in the March quarter, with GDP rising by 0.2%. That was broadly in line with what the market and the Reserve Bank were expecting, though it beat our bottom-of-the-range forecast of a 0.2% decline.

No Rate Cuts Expected from SNB, BoE, or NB today

We expect the BoE to keep the Bank Rate unchanged at 5.25% today with 7 members voting for unchanged and 2 members for a cut. We expect little change in communication and expect the first 25bp cut to be delivered in August. See more in Bank of England Preview, 14 June.

Swiss National Bank, Norges Bank and Bank of England Will Decide on Monetary Policy

The Swiss National Bank, the Norges Bank and the Bank of England will decide on monetary policy. Markets are divided whether the SNB should follow-up on the March 25 bps cut. The Norges Bank and the BoE probably have no room yet to give concrete guidance on the start of an easing cycle. EUR/GBP for now found a new ST equilibrium between 0.84 and 0.85.

SNB Cut Sends Swiss Franc Tumbling

The Swiss franc is down sharply on Thursday. USD/CHF is trading at 0.8897 in the European session, up 0.67% on the day.

Bank of England Review

As expected, the Bank of England (BoE) decided to keep the Bank Rate unchanged at 5.25%. The vote split was unchanged since the May meeting with 7 members voting for an unchanged decision and Dhingra and Ramsden voting for a cut.