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Contributors Franc to Look Past SNB Announcement, Euro May Fall on ECB Rhetoric

Talking Points:

  • Swiss Franc Unlikely to Find Volatility in SNB Policy Announcement
  • Euro May Turn Lower Anew on Dovish Rhetoric from ECB Officials
  • NZ Dollar Fell on Corrective Flows, Soft 1Q GDP Figure Overnight

A monetary policy announcement from the Swiss National Bank headlines the economic calendar in European trading hours. Expectations pointing to a status-quo outcome are unlikely to be let down. The overall trend in Swiss inflation data has been broadly in line with consensus forecasts for over a year. More of the same going forward argues against changes in the policy mix as analysts pencil in price growth south of 1 percent through next year. With that in mind, the announcement is unlikely to offer meaningful impetus for Swiss Franc volatility.

Elsewhere, commentary from ECB officials may prove of note. Remarks from Vice President Vitor Constancio and Governing Council member Ignazio Visco are set to come across the wires. The ECB alluded to a forthcoming ABS purchase program as the next step in expanding its stimulus efforts and traders will be on the look-out for any details illuminating the operational details and timing of such a move. Rhetoric suggesting the QE-style effort is relatively close to implementation is likely to weigh on the Euro and we are looking for EURUSD selling opportunities.

The New Zealand Dollar underperformed in overnight trade, sliding as much as 0.3 percent on average against its leading counterparts. The move followed a disappointing first-quarter GDP reading that showed output added 1 percent in the three months through March, falling short of forecasts calling for a 1.1 percent gain. Corrective flows probably amplified the decline after the Kiwi led the majors in the prior session following the FOMC policy announcement.

Asia Session
200614a

European Session
200614b

Critical Levels
200614c

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