SWITZERLAND DATA: Swiss CPI Details Confirm Upside From Imported Goods
Looking at the details of the June Swiss CPI print confirms that upside pressure came from (imported) core goods (non-energy industrial goods), with both the clothing and household items categories adding in contribution (alongside some hospitality upside contribution, which came mainly from the hotels category).
- Our reading is that today's print should, on the margin, take away from imminent pressures for the SNB to further reduce its policy rate into negative territory. However, in its medium-term view of inflationary pressures, which historically has been key for the rates decisions, the SNB places greater focus on domestic and services inflation, where there were less notable moves today. Also, there are two further monthly inflation readings ahead of the next meeting in September, meeting, so there will be more data to take into consideration.
- See table below:
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STIR: 35-40bp Of BoE Cuts Still Priced Through December
GBP STIRs little changed to slightly more dovish this morning, with a well-received 10-Year JGB auction and soft Dutch CPI data providing support to wider core global FI markets.
- SONIA futures little changed to +1.5.
- The front 8 BoE-dated OIS contracts are little changed to ~2bp more dovish on the day, showing ~37.5bp of cuts through year-end, with the next 25bp move more than fully discounted come the end of the November MPC.
- Multi-week ranges intact in both of those markets.
- Late on Monday BoE hawkish dissenter Mann noted that it is not possible to simply offset the impact of QT on financial conditions by cutting Bank Rate. She went on to highlight that a policymaker could seek to offset this through an extra rate cut, or cuts, if the effect was large enough, but argued against doing so.
- Note that BoE Governor Bailey, along with Deputy Governor Breeden & fellow MPC members Mann & Dhingra, will appear in front of a Treasury Select Committee this morning (10:15 London).
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Jun-25 | 4.212 | +0.1 |
Aug-25 | 4.098 | -11.3 |
Sep-25 | 4.055 | -15.7 |
Nov-25 | 3.915 | -29.6 |
Dec-25 | 3.836 | -37.5 |
Feb-26 | 3.722 | -48.9 |
Mar-26 | 3.696 | -51.5 |
USD: A positive start against G10s
- The Dollar starts the session on the front foot against G10s going into the European session, although if we just look at the past 5 days, the Greenback is in the red versus all G10s.
- The Kiwi is now the early worst performer, down 0.66%, but the NZDUSD still managed to print its best level since last October Overnight.
- A fall back down to 0.5956 would reverse Yesterday/Today's gains.
- The USDJPY has seen another 89 pips wider session, and so far it has found some demand just ahead of 142.12, May's low, while better support is still seen just below circa 141.96.
- USDJPY printed a 142.38 low overnight and the medium, longer term outlook still sees risk to the 139.58 level.
- The Swiss CPI came inline with the consensus and had no impact on the Swissy, USDCHF still trades in a contained 30 pips range.
EQUITY TECHS: E-MINI S&P: (M5) Bull Cycle
- RES 4: 6124.00 High Feb 24
- RES 3: 6080.75 High Feb 26
- RES 2: 6057.00 High Mar 3
- RES 1: 6008.00 High May 29
- PRICE: 5924.75 @ 07:27 BST Jun 3
- SUP 1: 5836.99/5756.81 20- and 50-day EMA values
- SUP 2: 5596.00 Low May 7
- SUP 3: 5455.50 Low Apr 30
- SUP 4: 5355.25 Low Apr 24
The trend condition in S&P E-Minis is unchanged and remains bullish. Recent gains delivered a print above 5993.50, the May 20 high and a bull trigger. The break highlights a resumption of the uptrend and maintains a price sequence of higher highs and higher lows. 6000.00 has been pierced, an extension would open 6057.00 next, the Mar 3 high. Key support lies at 5756.81, the 50-day EMA. A clear break of this average is required to highlight a reversal.
