- Fed's Jefferson: The labor market is softening and could face stress if not supported
- SNB's Chairman Schlegel: Inflation is expected to rise slightly in the coming quarters
- Gold turns lower on the day amid a bout of profit-taking
- Italy September preliminary CPI +1.6% vs +1.7% y/y expected
- Italy August PPI -0.6% vs +0.5% prior
- Bavaria September CPI +2.4% vs +2.1% y/y prior
- Germany September unemployment change 14k vs 8k expected
- ECB's de Guindos: The current level of interest rates is adequate
- Switzerland September KOF leading indicator index 98.0 vs 97.0 expected
- France September preliminary CPI +1.2% vs +1.3% y/y expected
- What are the main events for today?
- Germany August import price index -0.5% vs -0.2% m/m expected
- Germany August retail sales -0.2% vs +0.6% m/m expected
- UK Q2 final GDP +0.3% vs +0.3% q/q prelim
- RBA governor Bullock: Will not say if market pricing is right or wrong
- RBA governor Bullock: The board sees the risks as broadly balanced
- RBA leaves cash rate unchanged at 3.60% as expected in Sept monetary policy decision
- FX option expiries for 30 September 10am New York cut
We had an unusually busy calendar today in the European session but market moves have been relatively slow. The main event was the RBA's monetary policy announcement where the central bank held interest rates steady as expected but tweaked the statement to a slightly hawkish stance. In fact, previously they said that "inflation has continued to moderate" but now they're saying that "the decline in underlying inflation has slowed".
RBA's Governor Bullock didn't offer much in terms of forward guidance and kept all options on the table. She didn't endorse the market pricing and said that "there could be a couple of more rate cuts or there could be not". They are going to wait for the data and make decisions meeting by meeting.
The other key releases were the inflation reports from the largest Eurozone economies i.e. France, Germany and Italy. French inflation eased further although services inflation increased from 2.1% to 2.4%. Italian inflation remains basically at target with core inflation holding steady at 2.1%. Finally, the german state inflation figures came out all on the hotter side which suggest that we could see higher than expected numbers at the top of the hour when the national CPI comes out.
Lastly, we got the SNB's Chairman Schelegel and Fed's Vice Chair Jefferson commenting on monetary policy. Schlegel said that they expect inflation to rise slightly in the coming quarters, so we are not going to see a change in policy anytime soon. Jefferson, on the other hand, just reaffirmed the Fed's focus on the labour market at the moment as they don't want to see further softening. This puts Jefferson i the neutral camp i.e. two cuts by the end of the year.
