Is Swiss National Bank About to Slash Rates?

The Swiss economy is losing momentum. Economic growth slowed sharply last year, clocking in at just 0.6% in annual terms during the fourth quarter, as domestic consumption moderated  while weaker growth trends in the Eurozone and China dampened exports.

Busy Day With Rate Reviews and PMI Pulse Check

It is rate review day for several central banks, as we look to both the Swiss National Bank (SNB, 9.30 CET), Norges Bank (10.00 CET), and Bank of England (BoE, 13.00 CET) to publish their decisions.

Interesting Divide Between Markets' and Our Interpretation on Fed

Let’s dive right into yesterday’s Fed meeting. There’s an interesting divide between markets’ and our interpretation. For the former it was nothing but an outright dovish, cuts-are-coming-soon tribute. The three major US stock indices simultaneously closed at record highs. US yields turned south, slipping more than 8 bps at the front. The dollar tanked. EUR/USD bounced of an intraday low around 1.084 to finish around 1.092.

Pound Edges Lower Ahead of BoE Meeting

The British pound is slightly lower on Thursday. In the European session, GBP/USD is trading at 1.2766, down 0.16%.

USD/CHF Analysis: SNB Decision Breaks Multi-month Trend

According to Reuters, on the sidelines of the World Economic Forum in Davos in January, the head of the Swiss National Bank (SNB) Thomas Jordan told the Swiss press that the appreciation of the franc creates problems for exporters. Thus, indicating intentions to weaken the CHF.

Crypto Finished Its Pullback Thanks to Fed

Bitcoin has held within a classic correction, never falling below 61.8% of the rally around $60.3K. If the positivity doesn’t dissipate quickly, the next major milestone will be a return to highs above $73K.

Sunset Market Commentary

The EMU economy came close to stabilizing in March with price pressures easing. The composite PMI recovered slightly more than hoped, from 49.2 to 49.9 (vs 49.7 consensus), matching the best (least bad) outcome since June of last year. Divergence between a weak export-oriented manufacturing sector (45.7 from 46.5) and a recovering domestic services industry (51.1 from 50.2) increased.

Bank of England Review

As expected, the Bank of England (BoE) decided to keep the Bank Rate unchanged at 5.25%. The vote split indicated a continued split committee but to a much lesser extent than previously. At this meeting, 8 members voted for an unchanged decision and one member for a 25bp cut compared to a former 6-2-1 split vote split with hawks Haskel and Mann changing their vote from a hike to an unchanged decision.

Cliff Notes: Four Sets of Circumstances, One Intent

In Australia, the RBA Board once again decided to leave the cash rate unchanged at 4.35% after reflecting on recent data. The new information included the Q4 National Accounts, which confirmed the economic slowdown broadened into year-end, and the Q4 Wage Price Index, which revealed an underlying slowdown in private sector wages growth associated with a softening labour market (more below) and benign inflation expectations.

SNB First G10 Bank to Cut Rates

The SNB delivered a 25bp rate cut to 1.50%, in line with our expectations, and cited reduced inflationary pressure and a strong CHF, as well as materially lower inflation projections. Consensus was for a hold and markets sent the EUR/CHR higher during the day with the cross up 0.8% as of last night. The SNB is the first of the G10 central banks to lower rates, so this could be the start of a global rate-cutting cycle.