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SNB Maechler: Franc remains at a very high value, absolutely

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    ActionForex.com
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    SNB governing board member Andrea Maechler said that “franc remains at a very high value, absolutely”. And that’s why “we need an expansionist monetary policy”. Also, she stressed that SNB’s willingness to intervene in the currency markets.

    Though, she also noted that SNB will weigh the pros and cons of intervention, as “we need to have a sustainable monetary policy and keep our margin of maneuver.”

    Fed Barkin: Rate cut for mid-cycle reduction for insurance

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      ActionForex.com
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      Richmond Federal Reserve President Thomas Barkin said in a speech that the “national economy appears great”. Unemployment rate is at 50-year lows and GDP growth is solid. Consumers also “feel confident and are spending”. However, “international economies are weaker”, with “elevated” uncertainty particularly around trade. Business investment dropped in Q2.

      Hence, with muted inflation risk, Barkin said, Fed decided to make a “mid-cycle reduction” in interest rates earlier this month. That goal was to provide a “little insurance for the continued growth of the economy and strength of the labor market.”

      Full speech here.

      USTR on track to impose new 15% tariffs on China on Sept 1

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        ActionForex.com
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        US Trade Representative office affirmed that the administration is carrying on with the plan to impose new tariffs on China. In Federal Register notice, it’s noted that 15% tariffs will take effect on part of the USD 300B in Chinese goods, starting September 1.

        The second batch of products include cell phones and laptop computers. 15% tariffs on this second batch will take effect of December 15.

        US oil inventory dropped -10m barrels, WTI rebounds in range

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          ActionForex.com
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          US commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) dropped -10m barrels in the week ending August 23. The decline was way larger than expectation of -2.8m barrels fall. At 427.8m barrels, crude oil inventories are at the five year average for this time of year.

          WTI crude oil jumps sharply in response to the data release. Focus is now back on 57.32 resistance. Break will resume the rise from 50.43 to 100% projection of 50.43 to 57.32 from 52.84 at 59.73. Overall, WTI is staying in range of 50.64/60.93. Thus, we’d look for resistance from 60.93 to extend range trading.

          UK Johnson’s move to suspend government drew furious response from MPs

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            ActionForex.com
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            UK Prime Minister Boris Johnson confirmed that he has asked the Queen for permission to suspended the parliament from “the second sitting week in September”. MPs will then return on October 14, when there will also be a new Queen’s speech. Johnson insisted that MPs would still have “ample time” to debate Brexit, and there is a “bold and ambitious domestic legislative agenda for the renewal of our country after Brexit”. The net effect for the suspension will cut short the time for MPs to introduce legislations to block no-deal Brexit on October 31.

            House Speaker John Bercow issued a strong statement, saying that Johnson’s move “represents a constitutional outrage”. He added, “however it is dressed up, it is blindingly obvious that the purpose of prorogation now would be to stop Parliament debating Brexit and performing its duty in shaping a course for the country”.

            Labour leader Jeremy Corbyn said “I have protested in the strongest possible terms on behalf of my party and all the other opposition parties that are going to join in with this in saying that suspending parliament is not acceptable, It’s not on.”

            Scotland’s First Minister, Nicola Sturgeon also complained that “it’s absolutely outrageous”. And, “shutting down parliament in order to force through a no-deal Brexit which will do untold and lasting damage to the country against the wishes of MPs is not democracy. It’s a dictatorship.”

            UK government said to be asking Queen to suspend parliament

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              ActionForex.com
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              Sterling tumbles sharply after BBC reported that Prime Minister Boris Johnson would ask the Queen to suspend parliament, in an attempt to stop blocking of no-deal Brexit. MPs are originally expected to return to work in September. But the new government want to tie it to Queen’s speech on or around October 14. Opposition MPs and Tory rebels will then be left with not enough time to pass any laws that could avert no-deal Brexit on October 31. Additionally, the UK would be in constitutional crisis as furious MPs would push for a vote to bring down the government.

              GBP/USD’s sharp fall and break of 1.2208 minor support suggests that corrective rebound from 1.2014 has completed earlier than expected at 1.2309. Intraday bias is now back on the downside for retesting this 1.2014 low.

              Eurozone M3 rose 5.2%, solid growth in lending to households and businesses

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                ActionForex.com
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                Eurozone M3 money supply growth accelerated to 5.2% yoy in July, up from 4.5% yoy and beat expectation of 4.7% yoy. M3 growth averaged 4.8% in the three months to July.

                Meanwhile, household lending growth accelerated to 3.4% yoy, up from 3.3% yoy, hitting a post-crisis high. Corporate lending growth was unchanged at 3.9% yoy, staying at the highest level this year.

                The overall set of data is seen as indication of future activities. And, robust growth in money supply and lending argues that even though the economy is cooling, there is no imminent risk of recession yet.

                Full release here.

                German Gfk consumer confidence unchanged, but economic outlook suffered a significant decline

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                  ActionForex.com
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                  German Gfk Consumer Confidence for September was unchanged at 9.7, slightly above expectation of 9.6. The underlying picture was mixed though, with increase in propensity to buy, slight deterioration in income expectation. By contrast, the economic outlook suffered a significant decline.

                  Economic indicator dropped -8.3 pts to -12.0, hitting the lowest level in more than six years since January 2013. Gfk noted: “The global economic downturn, trade wars and the ongoing discussions surrounding Brexit are all putting increasing pressure on the economic outlook of consumers.”

                  Full release here.

                  RBNZ Orr: Lower interest rates offer greater certainty on the financial and investment front

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                    ActionForex.com
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                    RBNZ Governor Adrian Orr said in an article that “monetary policy (the domain of central banks) has its limitations and needs to be partnered with broader fiscal and structural economic policy (the domain of the government of the day)… Providing certainty in uncertain times is a great skill to have, and central bankers world-wide are working hard to do just that.”

                    He added that “lower interest rates do not remove the global political uncertainty.” But they “offer greater certainty on the financial and investment front”. And, “businesses and governments should be re-assessing their hurdle rates on their investment projects. Low and stable global interest rates mean that what was once costly may now be a sound investment for the future.”

                    Full article here.

                    EU Juncker told Johnson no-deal Brexit is UK’s decision

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                      ActionForex.com
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                      The 20-minute telephone call between UK Prime Minister Boris Johnson and European Commission President Jean-Claude Juncker appeared to have delivered nothing new. Johnson’s spokespersons said he released that ” UK will be leaving the EU on October 31, whatever the circumstances, and that we absolutely want to do so with a deal.” Also, Johnson was “clear, however, that unless the Withdrawal Agreement is reopened and the backstop abolished there is no prospect of that deal.”

                      On the other hand, Juncker’s spokesperson said he “repeated his willingness to work constructively with Prime Minister Johnson and to look at any concrete proposals he may have, as long as they are compatible with the Withdrawal Agreement.” And, Juncker underlined the EU27’s support for Ireland is steadfast and that the EU will continue to be very attentive to Ireland’s interests.” Also, EU was “fully prepared for a no-deal scenario” and “a no-deal scenario will only ever be the UK’s decision, not the EU’s.”

                      Separately, the opposition parties were seeking to pass a law to force a Brexit delay to prevent no-deal Brexit.

                      Italy edging close to political resolutions

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                        ActionForex.com
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                        Italy appeared to be edging closer to political resolutions even though coalition talks were dragging on to Wednesday’s deadline. Comments from both 5-Star Movement and Democratic Party (PD) were up beat after yesterday’s meeting concluded.

                        PD’s Senate leader Andrea Marcucci said “our work is continuing in a fruitful way”. Deputy PD leader Paola De Micheli said the two sides had “analyzed points for the basis of a common program”. 5-Star’s Senate chief Stefano Patuanelli also said there was a “good climate” during the meeting.

                        Both parties are expected to tell President Sergio Mattarella by Wednesday 1400 GMT on whether a coalition could be formed. If not, Mattarella would dissolve the parliament and call for an early election.

                        US consumer confidence dropped to 135.1, tariff escalation could potentially dampen optimism

                          By
                          ActionForex.com
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                          US Consumer Confidence dropped slightly to 135.1 in August, down from 135.8 but beat expectation of 129.0. Present Situation Index rose from 170.9 to 177.2. Expectations Index dropped from 112.4 to 107.0.

                          Lynn Franco, Senior Director of Economic Indicators at The Conference Board said: “While other parts of the economy may show some weakening, consumers have remained confident and willing to spend. However, if the recent escalation in trade and tariff tensions persists, it could potentially dampen consumers’ optimism regarding the short-term economic outlook.”

                          Full release here.

                          ECB de Guindos: Market expectations cannot replace policy judgement

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                            ActionForex.com
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                            ECB Vice President Luis de Guindos said that policy makers need to take market expectations with a “punch of salt”. He emphasized that “Our monetary policy is data dependent, not market dependent: indications from market expectations cannot replace our policy judgment”.

                            He also added, “another way of robustifying our analysis is to look for expectations beyond those expressed in financial market prices.”

                            Sterling jumps as UK lawmakers agreed to seek Brexit delay by legislation

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                              ActionForex.com
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                              Sterling jumps on news that opposition parties agreed to try to pass a law to see another Brexit delay to prevent a no-deal Brexit on October 31. MP Anna Soubry tweeted : “Excellent meeting between all the opposition party leaders this morning. We agree we will work together to stop a no deal #Brexit by legislation”. Green Party MP Caroline Lucas also told BBC that MPs agreed “that the legislative way forward is the most secure way to try to extend Article 50, to get rid of that 31st October deadline towards which the prime minister is careering with ever greater recklessness”.

                              GBP/USD rises sharply today and the rebound from 1.2014 is likely resuming through last week’s high at 1.2293.

                              German Q2 GDP finalized at -0.1% qoq, slowed by foreign trade

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                                ActionForex.com
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                                Germany Q2 GDP was finalized at -0.1% qoq, 0.4% yoy. Statistisches Bundesamt noted that foreign trade slowed down growth. On the other hand, consumption expenditure and capital formation supported economic activity

                                It said that after seasonal and calendar adjustment, price-adjusted exports were down -1.3% from the preceding quarter, markedly more than imports (-0.3%). Positive contributions came from domestic demand. Household final consumption expenditure increased by 0.1% qoq. Government final consumption expenditure rose by 0.5% qoq.

                                Full release here.

                                Italy coalition talk on verge of failure

                                  By
                                  ActionForex.com
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                                  In Italy, ruling 5-Star Movement halted the coalition talk with opposition Democratic Party with a blunt statement today. The statement noted that “Yesterday after four hours of talks, nothing was achieved… We cannot any longer work like this. Either the attitude changes or it’s difficult. We will see the PD again when the party has given its OK to the reappointment of Conte.” On the other hand, PD spokesman accused 5-Star leader Luigi Di Maio of hindering talks with his request to serve as interior minister as well as deputy prime minister.

                                  The two parties are expected to report back to President Sergio Mattarella tomorrow, on the conclusion of coalition talks. If they cannot come to an agreement, Mattarella is expected to name a caretaker government and call early elections.

                                  EU Juncker and UK Johnson to hold call on Brexit today

                                    By
                                    ActionForex.com
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                                    The European Commission said that President Jean-Claude Juncker will hold a telephone call with UK Prime Minister Boris Johnson on Brexit today. That comes as UK Brexit negotiator is going to Brussels tomorrow for a renewed push for Brexit negotiations. The commission’s spokesperson Mina Andreeva reiterated that “we stand ready to engage constructively with the UK on any concrete proposals that are compatible with the Withdrawal Agreement.”On the other hand, Johnson’s spokesperson Alison Donnelly said he believed there was enough time to agree on backstop alternative. And UK wants to discuss the options.

                                    Separately, UK Labour leader Jeremy Corbyn is hosting a meeting with other parties on stopping a no-deal Brexit. And he left all options open on the table. Labour leader is set to be ready to support the call for a general election, even if the vote took place just days before the October 31 Brexit deadline.

                                    RBNZ Orr: Global investment on hold for political uncertainty in many, many regions

                                      By
                                      ActionForex.com
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                                      In an interview by Australian Financial Review, RBNZ Governor Adrian Orr said the “single biggest” factor for -50bps rate cut was domestic. Inflation expectations were starting to decline and “we didn’t want to be behind the curve”. He added, “we want to keep inflation expectations positive – near the mid-point of the band.” But Orr also noted that “global interest rates had swung dramatically between our monetary policy statements.” And the large swing in forward interest rates suggested “a significant story behind that.”

                                      Orr also noted “investments has really been on hold for a while” globally, “given political uncertainty across many, many regions”. ” US-China escalating trade challenge, and that’s real now… Likewise, other countries: the Italians without government, Brexit, Hong Kong… So that manifests itself from being a political uncertainty, to capital no longer being invested. So this is one of the rolling challenges that’s happening.”

                                      His full interview here.

                                      ECB Kazimir: Credible policy action needs broad unity and agreement

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                                        ActionForex.com
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                                        ECB Governing Council member Peter Kazimir said yesterday that he was leaning toward “action, doing something” at the September meeting. Though, he also emphasized that “we need to take steps that are credible in the eyes of the market.” And, “credibility also means broad unity and agreement on the measures.”

                                        Kazimir also noted that there are no limits on what ECB could pick from its toolbox. However, economic outlook differs across Eurozone. Thus, finding a consensus for the whole are is important. And he preferred “the broadest agreement”.

                                        RBA Debelle: Exchange rate plays important role of external shock absorber

                                          By
                                          ActionForex.com
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                                          RBA Deputy Governor Guy Debelle warned that US-China trade war poses a “significant risk” to Australia and the rest of the world. He also defended the existing rules-based global trading system. He said, “despite some flaws, that system has delivered sizeable benefits for global growth and welfare”, and “Australia has clearly been a major beneficiary of that system.”

                                          Nevertheless, Debelle also noted that Australia is “less vulnerable” to external shocks now. He said “if you look at the balance sheet of the country as a whole, Australia has a net foreign currency asset position”. “Hence when the exchange rate depreciates, the value of net foreign liabilities actually declines rather than increase. To reiterate, this allows the exchange rate to play the important role of shock absorber to external shocks”, he added.

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