DAILY FX WRAP – AUD soars on strong employment data while the BoE and SNB fail to offer much in terms of new insight
Both the SNB and BoE announced their latest rate decisions today but failed to force a sustained reaction in their domestic currencies. The SNB kept rates on hold as expected and reiterated their opinion that the CHF is overvalued and their willingness to intervene in FX markets, but failed to shed much in terms of new light and as such saw little reaction in EUR/CHF, given the already relatively high level of the pair after the less dovish than expected ECB last week.
Meanwhile the BoE continued to vote 8-1 to keep rates on hold and highlighted that the decline in oil prices has made it more probable that inflation will remain low, while also saying that nominal wage growth appears to have plateaued. This saw initial softness go through GBP, however weakness pared ahead of the European close as the rhetoric from the BoE failed to offer any new insight into the central bank’s opinion. After paring the losses, GBP/USD closed out the European session in close proximity to a large option expiry (750mln) at 1.5200 set to roll off at tomorrow’s 10am NY cut.
During Asia Pacific hours, Antipodeans were in focus, with AUD surging on the back of the blowout Australian jobs data, as the headline reading topped expectations printing the highest figure since July’00 (71.4K vs. Exp. -10.0K), which saw AUD/USD briefly break above 0.7300. The stellar report saw significant strength go through AUD as it reinforces the RBA’s view that the economy’s prospects have improved.
Looking ahead to tomorrow, a light European economic calendar sees focus fall on US data, with highlights including US retail sales, PPI final demand, business inventories and the preliminary reading of University of Michigan sentiment.