EU CONSUMER STAPLES: Carrefour Spain Consumer Financing arm (book update)

• Softer price action for major equity benchmarks on Monday is providing a moderately supportive backdrop for the dollar, as US yields hold on to the majority of last week’s late advance following the US PPI release. Despite this, the USD index continues to operate around the 98 mark, consolidating its 2% decline across August and keeping a bearish medium-term trend outlook intact.
• Strong pivot resistance just above the 100 handle marks the key topside level of interest for the DXY, while a move back below 97.10 would signal scope for a test of cycle lows and key support, located at 96.38.
• The Fed’s Jackson Hole Symposium kicks off Thursday, with the focus on the keynote speech by Chair Powell. Attention will mostly be on any nod to a potential September cut, but a large portion of his comments will touch on the findings from the Fed's policy framework review.
• JP Morgan note that while the underlying macro conditions of USD weakness remain intact, markets are increasingly facing a shrinking pool of imminent catalysts that have a defined date for the next leg weaker. JPM believe US data needs to slow further or market concerns on Fed independence need to intensify for the next bout of high-intensity greenback weakness.
• Goldman Sachs expect USD depreciation largely because US economic performance no longer supports the currency’s high valuation. GS highlight that much of the dollar’s recent dip can be attributed to either quiet markets, which they think reveals the “easiest” direction of travel, and foreign developments such as BoJ rate hike speculation.

Swiss wage growth expectations stand at 1.3% for the next year according to a KOF survey, vs 1.6% in a previous survey from July 2024. This would mean real wage growth of "less than 1%" on KOF inflation assumptions or just 0.2% on firms’ inflation expectations, but it would help avoid an outright deflationary environment even if the release notes a tariff-related caveat. 

• Those real wage growth expectations are based on KOF’s inflation forecast of 0.5% and firms’ inflation expectations of around 1%.
• Remember that the SNB highlighted a "high bar" to further cuts in its policy rate into negative territory at their June meeting. They would have to see inflation threatening to fall below its 0% lower target threshold in the medium term to back such a move.
• KOF comments on the survey: "On the one hand, this decline [relative to last year's result] is likely to reflect the easing of the shortage of skilled workers on the Swiss labour market. On the other hand, it is likely to reflect the sharp drop in consumer price inflation in Switzerland in recent months. If inflation falls during the year, there is less need to adjust wages next year in line with past inflation. However, as these figures were collected before 1 August, the decline is not attributable to the high industrial tariffs that the US has recently imposed on Swiss companies. The tariffs are likely to have further reduced wage growth expectations, particularly in US-oriented companies in the industrial sector".
• Around 4500 Swiss companies took part in the KOF survey. Swiss Q2 employment data is scheduled for release tomorrow.