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Currencies May Move More on US Retail Sales Data vs. BOE, SNB

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09/15/2016 | 11:10am CEST
DailyFX.com -

Talking Points:

  • 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.

Is guessing price direction most important for successful trading? See our study to find out!

Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

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

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

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

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.1119

1.1182

1.1216

1.1245

1.1279

1.1308

1.1371

GBP/USD

1.3001

1.3103

1.3169

1.3205

1.3271

1.3307

1.3409

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To receive Ilya's analysis directly via email, please SIGN UP HERE

Contact and follow Ilya on Twitter: @IlyaSpivak


original source

© FXCM 2016
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