SNB: Inaugural Meeting Minutes Preview: NIRP Thoughts in Focus (2/2)
- On the bar to negative rates: Chairman Schlegel referred to the meeting minutes in the September Q&A when being asked how close the Governing Board was to cutting into negative territory. Any info in the summary document suggesting the Governing Board seriously considered such a move may prompt a dovish repricing in Swiss STIR. However, the summary document may also signal that the Governing Board was far away from a cut, and that a material shock would have to filter through for them to come close to such a move. This may see a further tapering of remaining easing priced into the Swiss curve.
- On the potential opening remarks signal: In his September opening remarks, Schlegel did not repeat the "undesirable side-effects" and "challenges" associated with negative rates which he mentioned in June, remaining more neutral on the policy outlook. If this was a deliberate choice, two interpretations seem possible: Either, the Governing Board thinks the probability of negative rates has risen marginally since June (or their assessment of the risks associated with them may be lower than previously seen) and, even if they did comment on it in the Q&A, that led them to cut out the comments out of the opening remarks.
- However, the other option is that the Governing Board thinks that negative rates have moved out of focus or are improbable enough that comments in the opening remarks are no longer warranted. The Governing Board was not asked on their rationale here in the September Q&A.
- On FX valuations: The SNB continues to refrain from giving close guidance on CHF levels, but did comment broadly on material moves. Indeed, Schlegel commented that the CHF had appreciated "really a lot" in the aftermath of the US tariffs announced on April 2 this year. Any further info on the Governing Board's views would prove insightful.
Our September meeting review including a rough Q&A transcript is here.
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WTI TECHS: (X5) Still Looking For Weakness
- RES 4: $76.89 - 2.764 proj of the Apr 9 - 23 - May 5 price swing
- RES 3: $74.79- 2.500 proj of the Apr 9 - 23 - May 5 price swing
- RES 2: $73.39 - High Jun 23 and a bull trigger
- RES 1: $65.43/68.43 - High Sep2 / High Jul 30 and key resistance
- PRICE: $61.98 @ 07:19 BST Sep 23
- SUP 1: $60.85 - Low Aug 13 and the bear trigger
- SUP 2: $57.50 - Low May 30
- SUP 3: $54.89 - Low May 5
- SUP 4: $54.10 - Low Apr 9 and a key support
The trend condition in WTI futures is unchanged - a bear cycle remains intact and recent gains are considered corrective. The pullback from the Sep 2 high highlights a possible reversal and the end of a corrective phase between Aug 13 - Sep 2. Initial resistance to watch is $65.43, the Sep 2 high. Key short-term resistance has been defined at $68.43, the Jul 30 high. A stronger resumption of weakness would open $57.50, the May 30 low.
USD: Riksbank's decision is a close call
- The Dollar is closer to flat going into the European session against most G10s, some immediate focus is on the Kiwi, the worst early performer, as NZDUSD look to challenge Yesterday's low.
- The cross hovers near few support levels seen at 0.5833 (Sept Low), 0.5818, but more importantly 0.5800 August low and lowest printed level since mid April.
- Early focus is on the Stokkie and the Riksbank decision.
- While the Median consensus is for an Unchanged Rate at 2%, the broader expectation among Economist is far more split between a 25bp Cut and a Hold.
- The SEK is fairly stable ahead of the Decision, down a tiny 0.05% against the EUR, and a small 0.14% vs the Dollar.
- The Rest of G10 FX Currencies are steady, even the known volatile Yen only trades in a 27 pips range.
GOLD TECHS: Fresh Cycle High
- RES 4: $3831.4 - 2.000 proj of the Dec 30 ’24 - Apr 3 - 7 price swing
- RES 3: $3800.0 - Round number resistance
- RES 2: $3783.2 - 1.618 proj of the May 15 - Jun 16 - 30 price swing
- RES 1: $3759.2 - Intraday high
- PRICE: $3756.3 @ 07:27 BST Sep 23
- SUP 1: $3683.8 - Low Sep 22
- SUP 2: $3594.0 - 20-day EMA
- SUP 3: $3484.2 - 50-day EMA
- SUP 4: $3311.6 - Low Aug 20
Gold is in a clear bull cycle and shallow short-term pullbacks remain corrective. A fresh all-time high once again, yesterday and today, confirms a resumption of the primary uptrend and an extension of the sequence of higher highs and higher lows. The next objective is $3783.2, a Fibonacci projection. Initial firm support lies at $3594.0, the 20-day EMA. Note that MA studies are in a bull-mode position, highlighting a dominant uptrend.
