SNB: Not discussing a CHF minimum exchange rate

France looks set for another period of significant political instability after PM Francois Bayrou effectively called a confidence vote in his own gov't on 25 Aug. Bayrou said that he had requested an extraordinary session of the National Assembly to be convened on Monday, 8 September to "confirm the scale" of spending cuts in the upcoming 2026 state budget, adding that "If you have a majority, the government is confirmed. If you do not have a majority, the government falls".

• The Bayrou gov't has been living on borrowed time for a while now. Formed by the centrist Ensemble bloc and the centre-right Les Republicains (LR), the gov't holds only 210 seats in the 577-member legislature. With the leftist New Popular Front alliance and the far-right Rassemblement National both set to vote against Bayrou, the gov'ts dismissal appears more likely than not.
• With more than a year having passed since that vote, President Emmanuel Macron is at liberty to call another set of legislative elections. Speaking to France 2 TV earlier, Justice Minister Gerald Darmanin said, "Dissolution [of the Assembly] is costly for France, of course, but this hypothesis should not be ruled out."
• Jean-Luc Melenchon, leader of the far-left La France Insoumise (LFI), confirmed in an interview with France Inter that his group will move forward with a motion of impeachment against Macron on 23 September. Melenchon claimed Macron must be removed from office as he is the "cause" of the current political paralysis.
• The collapse of the Bayrou gov't could come at the same time as a major effort by the left to pressure the Macron administration, with the 'bloquons tout' ('black everything') efforts to call a general strike, as well as road blockades and corporate boycotts. 

• The Dollar was overall flat during the Overnight session against all G10s, but we are starting to see few pips moves in EUR, GBP, JPY, SEK, USD versus the Nokkie.
• Oil has been under some small pressure, likely helping some of the NOK weakness.
• USDNOK is heading back to pre Powell level, the cross was exchanging hands around 10.1891, now at 10.1780 (prices are according to Bloomberg).

A quick summary of the latest developments in President Trump’s challenge to Fed independence, in case missed late yesterday/overnight: 

• Trump published a letter to Fed Governor Cook (in a permanent voting role through 2038) on Truth Social noting that “you are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately”.
• It follows and is based on prior accusations of mortgage fraud from FHFA’s Pulte, with Trump having first urged Cook to resign before threatening to fire her if she didn’t do so last week.  
• Gov. Cook has since said Trump has no authority to fire her and she won’t quit, doubling down on her position having pushed back on threats last week.
• From a statement released by Cook’s attorney: “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so. I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022.”
• Re-upping the MNI exclusive from April 21 with Lev Menand an ex-senior Treasury adviser who specializes in legal matters around central banking at Columbia Law School. He told MNI that Governors Lisa Cook, Michael Barr and Vice Chair Philip Jefferson, all appointed by former President Joe Biden, could be on the chopping block if Trump has his way. “The officials at most risk are the recently-appointed Biden appointed officials associated with bank regulatory policy.”
• Discussing an at-the-time pending ruling before the Supreme Court related to Trump’s firing of directors of other independent agencies but nevertheless still useful context, he added that if the President were to prevail, get this emergency stay and then say, ‘You know what, I'm just going to fire some Fed governors because they'll be out of a job for months,' the lower court can't put them back in during their litigation. See MNI INTERVIEW: Fed Independence Facing Imminent Risk – Menand (Apr 21).