Currency analyst

Morning newswatch as a special treat to your breakfast

AUD: Australian employment report – there was a slight increase (by 67.3K) in the total number of people employed, a rather pale data in comparison with the results of the last year. The picture of full time jobs is even more disappointing – an evident decline (by 50, 9K) compared to an increase of 93,1K from January to August 2015. Unhappy statistics demands further monetary stimulus from Australian authorities. There is a downside risk to the AUD/USD year end forecast of 0.74. This is based on our view that financial markets are underestimating the risk of a rate cut in Australia this year.

AUD/JPY: Yen is strengthening on the pessimistic employment data from Australian releases. The Melbourne Institute’s survey of consumer inflation expectations weakened to 3.3% in September, compared to 3.5% in August. The central bank will have to carve out a policy response to this decrease.

OIL: Jeff Currie (head of commodities research at Goldman Sachs) comments on oil prices. Don’t expect any rises in the near future. The risk is to downside. An agreement between producers at the OPEC & non-OPEC producer Russia scheduled for September 27 is not a game-changer.

Yen again: the BOJ is likely to cut negative rates further to -0.3%, according to the JPMorgan’s chief economist.

The AUD/NZD is edging back towards historically low levels.

CHF: The Swiss National Bank policy announcement is scheduled for today. The expectations are pretty much unanimous among economists – there won’t be any changes in the interest rates. The SNB have been very active interventionist in the CHF market, and it is determined to reaffirm its commitment to continue its interventions in the future. Flashback: the ECB didn’t change policy last week. So there won’t be new pressure on the EUR/CHF exchange rate.  A key focus of the SNB is the exchange rate, so the “no change” from then ECB equals to “no change” from the SNB.

Pending for a Bank of England meeting today. No change in monetary policy is expected.



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