Daily Briefing, June 13 – German CPI in Focus, While SNB to Hold Rates Today
Arslan Butt • 2 min read
Good morning, fellas.
The trading day has begun with mixed fundamentals from the Australian economy. Australia’s unemployment rate settled at 5.2% last month, despite producing 42k jobs in May.
Aussie Employment Report Review
- According to the labor market report, a historic number of Australians are in a job or watching for it, with participation at 66%.
- The unemployment rate held steady at 5.2%, but hours worked declined.
- Data show employment announcements in May were 6.5% lower than a year earlier,
- The Bureau of Statistics numbers confers that part-time employment expanded by 39.8k while full-time jobs only lifted by 2.4k.
Looking ahead into the late Asian and London open, the economic calendar remains light. However, the US session will bring us monetary policy decision from the Swiss National Bank. Let’s take a look at the fundamentals that are worth watching today.
EUR – German Final CPI m/m – 6:00 GMT
Destatis is due to release the CPI report for Germany. Germany, being a business hub, plays an important role in the Eurozone, which is why its economic events are closely monitored by investors.
Lately, German inflation figures improved from -0.8% in February to 1% in April, suggesting a strong bullish bias for the Euro. However, it looks like the Germans failed to maintain the momentum. Economists are expecting Final CPI to drop to 0.2% this month.
By the way, it’s a low impact economic event, which may or may not drive volatility on release. It depends upon the performance of Germany.
CHF – PPI m/m – 6:30 GMT
The Federal Statistical Office will be releasing the Producer Price Index for the Swiss economy just before the release of their monetary policy decisions. The PPI data reports a change in the price of goods and raw materials purchased by manufacturers.
How does it Impact Markets?
It’s a leading indicator of consumer inflation – when manufacturers pay more for goods, the higher costs are usually passed on to the consumer. That could also lead to a higher increase, which is one of the aims of SNB. Economists are expecting a 0.1% rise in PPI vs. 0.0% rise in May.
CHF – SNB Monetary Policy Assessment – 7:30 GMT
The Monetary Policy Assessment is the primary mechanism the SNB Governing Board practices to communicate with investors about monetary policy. It includes the result of their decision on interest rates and analysis about the economic conditions that affected their decision. Most importantly, it projects the economic outlook and offers clues on the outcome of future rate decisions.
The Swiss National Bank has held its policy unchanged since it lifted the peg beneath EUR/CHF on January 15, 2015. Since then, it sustains the Libor Rate at -0.75%, deep into negative territory. As per the market sentiment, they are not expected to modify their policy in the forthcoming meeting. However, they may start speaking about an exit plan from the negative interest rate, a move that could heighten the value of the Swiss Franc.