Intraday Market Thoughts

EUR/CHF Higher After Swiss Vote

by Adam Button
Nov 30, 2014 23:18

Swiss voters overwhelmingly rejected a referendum that would have forced the central bank to hold 20% of its reserves in gold. EUR/CHF rose 18 pips to 1.2039 in early trading. Japanese capex and Chinese manufacturing data is due later.  The existing Premium Insights include USDJPY, USDCAD, AUDCAD and EURGBP. All charts are in the Premium Insights.

The Swiss gold referendum was rejected by a 77-23% ratio. The large margin of victory can be seen as an endorsement of the SNB, the EUR/CHF peg and post-crisis monetary policy. Gold trading has yet to begin but if the move in EUR/CHF is any indication, the result wasn't fully priced in.

The SNB released a statement to say it was pleased with the result of the referendum and repeated statements about being ready to take immediate action if required.

Gold fell $24 on Friday to $1167 and support is at $1150 and the November low of $1131. Oil also remains in focus after the 10% collapse on Friday. The market may be cautious ahead of US trading because a wave of trading is expected after two days of holidays.

Other headlines circulated about the quality of US holiday weekend shopping but it's very difficult to separate PR from hard data. The shift towards online shopping severely undermines most of the data.

RBNZ Governor Wheeler also speak and said the level of NZD was “unjustified and unsustainable” but also lamented that there is little the central bank can do to alleviate it – a sign that further intervention could be off the table.

Early moves in the market show the euro 20 pip higher and AUD/USD nearly 40 pips lower. The driver for the latter could be a report showing declining property prices in China for the seventh consecutive month. 

For the euro, the ECB's Lautnschlaeger said on the weekend she sees little room for further monetary easing. The ECB meeting is on Thursday.

In the near term, the focus shifts to Q3 Japanese data on capital spending. The consensus is for a 2.0% y/y rise but the risk is to the downside after the terrible GDP numbers. The report is due out at 2350 GMT along with company sales and profit data.

At 0100 GMT, China is in the spotlight with Nov manufacturing data expected to slip to 50.5 from 50.8. The latest round of worries about China (and AUD) began after private numbers showed a slide to 50.0.

Act Exp Prev GMT
Fed's William Dudley speech
Dec 01 17:15
Capital Spending (Q3)
3% Nov 30 23:50

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