Headlines:
Markets:
- AUD leads, CHF lags on the day
- mixed European equity; S&P 500 futures down 0.2%
- US 10-year yield up 3.3 bps to 4.304%
- Gold down 0.2% to $2,711.93
- WTI rose 0.1% to $70.34
- Bitcoin was down 1.0% to $100,635
The main event in the European morning was the SNB's policy decision. And the Swiss central bank “surprised” with a 50 bps rate cut.
Analyst estimates were for a 25 bps move but market prices were leaning more towards a 50 bps move instead. The latter saw a ~58% probability of a 50 bps rate cut and the SNB duly delivered on that. A good number of traders still expected a 25 bps rate cut, so the Swiss franc fell after the decision.
USD/CHF moved up from 0.8825 to 0.8890 and is currently holding around 0.8870 levels. Meanwhile, EUR/CHF took a small bounce to 0.9340 but has seen gains back down to 0.9315 currently.
The SNB changed its guidance slightly in removing the passage “further rate cuts may be necessary” to simply state that it will monitor economic developments and adjust monetary policy accordingly.
In addition, there was not too much for broader markets to work and that includes the dollar in general as well. The greenback remains little changed against most other major currencies, with only the Aussie sitting higher otherwise. And that was due to a stronger Australian jobs report from earlier in the day. However, AUD/USD saw its gains moderated and is only up 0.4% to 0.6395 now – down from around 0.6420 earlier.
We also got headlines in China after the central economic work conference, in which it has been confirmed that they will reach their 2024 GDP growth target of around 5%. So, expect the final numbers to reflect that once we get through the year. Other than that, it was just the usual high level statement from China in talking about their motives and goals for the next year.
In the equity sector, things were more uncertain despite yesterday's gains. Meanwhile, bond yields are holding higher with the 10-year yield in the US touching 4.30% again. It's definitely a place to watch as bonds have been offered every day of this week so far.
The ECB is leading but the decision should be simpler. Therefore, do not expect many fireworks because the central bank will provide a rate cut of 25 bps and perhaps reconfirm its meeting by meeting a procedure.
Source link
