Market brief: Swissy breaks through parity

A summary of news and snapshot of moves ahead of the US session.

  • At midday in London the GBP and EUR were among the strongest while the AUD, NZD and CHF were the weakest

  • The economic calendar is full of data today and so far, the biggest event was the RBA’s rate cut, a decision which was mostly priced in - although the central bank still surprised the markets by providing a more dovish assessment of the economy and indicated rates could be loosened further if needed.
  • The EUR rose even though the Eurozone headline CPI fell further in September to 0.9% y/y, when an unchanged reading of 1.0% was expected. Core CPI rose however to 1.0% from 0.9%, in line with expectations. Meanwhile, the latest Manufacturing PMIs from the UK (48.3 vs. 47.0 expected) and Japan (Tankan) both beat, while those from Italy (47.8 vs. 48.2), Spain (47.7 vs. 48.2) and Switzerland (44.6 vs. 46.5) all disappointed. Still, Eurozone final PMI was revised a touch higher (to 45.7) thanks to a small positive revision for Germany. Nevertheless, all the above-mentioned PMIs remained below the boom/bust level of 50.0, pointing to falling economic activity and underscoring the need for further monetary stimulus by major central banks. Among the notable movers in FX, the USD/CHF broke above parity as Switzerland’s retail sales printed -1.4% y/y vs. +1.6% expected and the manufacturing PMI also disappointed as per above.
  • The Swiss franc and other safe haven assets such as gold and Japanese yen have been weighed down in recent days by ongoing risk-on trade with stocks remaining overall supported (even if the EU indices started today’s session on the back foot) amid US-China trade optimism and central bank support.

  • Is today’s weak start for European stocks due to fund managers rebalancing their portfolios? After all, Q3 ended with a bang for global indices. The S&P 500 recovered from a bad August to record its biggest year-to-date gain in more than 20 years. In Europe, too, the indices recovered to end Q3 noticeably higher. With central banks remaining in expansionary policy mode, and optimism rising that a US-China deal might be imminent, the stock market bulls are happy to keep buying every dip – for now.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account