SNB and Riksbank decisions today

MORNING OVERVIEW

Market interest in the CHF today may increase considering the SNB’s interest rate decision, although the accompanying statement may garner more attention than the decision itself. Moreover, of interest may be the Riksbank’s interest rate decision which is occurring simultaneously with the SNB. Other than that, Germany’s Ifo figures are also due out this morning, which could spike interest in the EUR.

MARKET SNAPSHOT

MARKET	CURRENT	CHANGE	COMMENT
S&P 500	7679	-0.34%	Companies received upgraded valuations
DXY	101.105	+0.01%	FOMC speakers today
EUR/USD	1.1387	+0.05%	Germany’s Ifo figures
Gold	4284	-0.06%	N/A
Brent Crude	103.37	+0.32%	N/A

KEY MARKET THEMES

01 — SNB decision day

The SNB’s interest rate decision is set to occur today during the European session. The majority of market participants are currently anticipating the bank to remain on hold at 0%, thus the decision in itself may not heavily influence the CHF. However, commentary from policymakers and the bank’s accompanying statement could be the main driver behind the CHF, as participants may be looking as to whether the SNB is preparing to hike rates in the near future. In turn any indication of such a possibility, could provide support for the CHF.

Market implication (CHF): NEUTRAL

02 — Riksbank decision day

The Riksbank’s interest rate decision is set to take place alongside the SNB’s decision. The bank is widely expected to remain on hold as well at 1.75%. Thus, as we discussed for the SNB previously, the impact on the SEK may be relatively low, yet a surprise rate hike could take the markets by surprise and provide support for the SEK. Although, should such a scenario not materialize, attention may turn to any commentary by the bank.

Market implication (#SEK): NEUTRAL

03 — Germany’s Ifo figures due out today

Germany’s Ifo figures for September are set to be released during today’s European trading session. The three key figures which are the business expectations, the business climate index and the current assessment are all set to improve when compared to the prior months figure, which in turn could provide support for the EUR, as expectations increase it may lead to higher economic activity in the country. Thus should the figures come in as expected or higher, we may see the EUR gaining support. However, a figure lower than what is currently expected could have the opposite effect.

Market implication (EUR) : BULLISH

WHAT MATTERS TODAY

SNB interest rate decision

Time (GMT+2): 10:30

Expected: 0%
Previous: 0%

Potential market reaction:
Could weaken the CHF

Germany’s Ifo business climate index for September

Time (GMT+2): 11:00

Expected: 89.1
Previous: 88.8

Potential market reaction:
Could support the EUR

Riksbank interest rate decision

Time (GMT+2): 10:30

Expected: 1.75%
Previous: 1.75%

Potential market reaction:

Could weaken SEK

ASSET FOCUS

[GOLD / COMMODITIES]

Gold prices appear to be moving in a downwards trajectory despite their clearing of our 4350 (R1) resistance level. We opt for a sideways bias for the precious metal’s price as long as the commodity remains confined between our 4350 (R1) resistance level and our 4200 (S1) support line. On the other hand, for a bearish outlook we would require a clear break below our 4200 (S1) support line with the next possible target for the bears being our 4080 (S2) support level. Lastly, for a bullish outlook we would require a clear break above our 4350 (R1) resistance line with the next possible target for the bulls being our 4510 (R2) resistance level.

KEY LEVELS

• Resistance (R1): 4350
• Resistance (R2): 4510
• Support (S1): 4200
• Support (S2): 4080

Technical View: BEARISH

CROSS-ASSET VIEW

ASSET CLASS	BIAS	KEY DRIVER
Equities	Bullish	Major companies received upgrade valuations
USD	Bullish	Inflation
Gold	Bearish	Dollar
Oil	Bullish	No concrete talks  between US-Iran

RISKS TO THE VIEW

The US striking Iran during the UN General Assembly or vice versa

The biggest risk to our view is still the US and Iran rapidly escalating hostilities with one another during the UN General Assembly. Doing so could upend our view’s immediately.

TRADING SPHERE VIEW

Bearish for Gold

Our base case:
Heightened inflationary pressures stemming from the Middle East in addition to hawkish commentary from Fed policymakers may indicate a more general hawkish shift in the Fed’s future monetary policy decisions, which in turn could support the dollar whilst weighing on gold’s price

What would change our view:
The US re-escalating strikes on Iran and vice versa

TODAY’S WATCHLIST

01 SNB interest rate decision

02 Riksbank interest rate decision

03 Germany’s Ifo figures