The main event in the European session will be the SNB Rate Decision. In the American session we will get the final US Q2 GDP, the US Jobless Claims and the US Durable Goods Orders.
07:30 GMT - SNB Rate Decision
The SNB is expected to cut rates by 25 bps and bring the policy rate to 1.00%. The market pricing is basically evenly split between a 25 or 50 bps cut. There are many strong reasons for the central bank to deliver a larger cut today:
- Inflation has been constantly surprising to the downside with the last release showing a drop to 1.1%, which is much lower than the SNB’s 1.5% projection for Q3.
- SNB’s Jordan said in late August that the continued strength of the Swiss Franc has been hurting the Swiss industry. That's a signal that they don't like the CHF strength.
- The Fed delivered a 50 bps cut and as we saw already with the BoJ, the SNB might decide to go bigger for fear of more CHF appreciation.
- The market priced in a back-to-back ECB cut in October following the latest PMIs and given that the next SNB decision will be only in December, they might opt to go bigger now.
Therefore, there’s a high chance that the central bank delivers a 50 bps cut today and maybe even throw in some jawboning to weaken the currency further by threatening intervention. But if it cuts by 25 bps, expect a strong commitment to weaken the currency by intervention.
12:30 GMT/08:30 ET - US Jobless Claims
The US Jobless Claims continues to be one of the most important releases to follow every week as it’s a timelier indicator on the state of the labour market.
Initial Claims remain inside the 200K-260K range created since 2022, while Continuing Claims after rising sustainably during the summer started to improve considerably in the last weeks.
This week Initial Claims are expected at 225K vs. 219K prior, while Continuing Claims are seen at 1838K vs. 1829K prior.
Central bank speakers:
- 09:00 GMT - ECB's Elderson (neutral - voter)
- 13:10 GMT/09:10 ET - Fed's Collins (neutral - non voter)
- 13:15 GMT/09:15 ET - Fed's Bowman (uber hawk - voter)
- 13:20 GMT/09:20 ET - Fed's Powell (neutral - voter)
- 13:25 GMT/09:25 ET - Fed's Williams (neutral - voter)
- 13:30 GMT/09:30 ET - ECB's Lagarde (neutral - voter)
- 14:15 GMT/10:15 ET - ECB's de Guindos (dove - voter)
- 14:30 GMT/10:30 ET - Fed's Barr (dove - voter)
- 14:30 GMT/10:30 ET - Fed's Cook (dove - voter)
- 16:00 GMT/12:00 ET - ECB's Schnabel (hawk - voter)
- 17:00 GMT/13:00 ET - Fed's Kashkari (hawk - voter)
