After yesterday’s snoozefest, today we have a much livelier day as we get two major central bank policy decisions and the US Jobless Claims figures. We will also have the US Housing Starts and Building Permits data released at the same time of the Jobless Claims, but the market will likely pay more attention to the Claims figures given last week’s “spike”.

07:30 GMT – SNB Policy Decision

The SNB is expected to cut interest rates to
1.25% although the market pricing stands around 68%, so it’s more of a coin-flip
between 1.50% and 1.25%. The latest inflation
rate came in line with SNB’s estimate at 1.4% Y/Y (Core 1.2% Y/Y).

The Swiss Franc saw a strong appreciation
recently due to Chairman Jordan’s comments
where he said that if any inflation risk were to materialise, it would most
likely be associated with a weaker Franc which could be counteracted by selling
foreign exchange (buying CHF).

He also touched on the neutral interest
rate (r*) and said that they estimate it to be around 0%. So, even if they cut
rates, in theory their policy would still be restrictive and if inflation were
to rise somewhat in the coming months, they could just intervene by buying
Swiss Franc.

11:00 GMT/07:00 ET – BoE Policy Decision

The BoE is expected to keep the Bank Rate
unchanged at 5.25%. As a reminder, the last meeting was a bit more dovish than
expected with Ramsden joining Dhingra voting for a rate cut and Governor Bailey
delivering some dovish comments like saying that they could cut more than
the market expected.

It’s pretty evident that the central bank
is eager to cut but nonetheless wants a bit more confidence before easing the
policy rate. Yesterday’s UK CPI was another step in the right direction (although services inflation remains very high) but it wasn’t such a gamechanger in the bigger picture with the market pricing reamining pretty much the same at 44 bps of easing by year end (48 bps before the CPI release).

12:30 GMT/08:30 ET – US Jobless Claims

The US Jobless Claims
continue to be one of the most important releases to follow every week as it’s
a timelier indicator on the state of the labour market. Initial Claims keep on
hovering around cycle lows, while Continuing Claims remain firm around the
1800K level.

This has
led to a weaker and weaker market reaction as participants become used to these
numbers. Nonetheless, we got a notable
miss in both Initial and Continuing Claims last week although the culprit
might have been just a seasonal effect or measurement
adjustment.

This week Initial Claims
are expected at 235K vs. 242K prior, while Continuing Claims are seen at 1810K vs. 1820K prior.

Central bank speakers: