FX Daily, September 30: SNB Intervenes to Polish Q3 Results

Swiss Franc

During the day the EUR/CHF has fallen to a low of 1.0819. We know that the in-official new floor lies at that level. Moreover, the SNB had to polish the Q3 results. With interventions she lifted the EUR/CHF to 1.0893 and the euro continued rising thanks to speculators that jumped on the train.
There was no economic data that could have justified the sudden increase.

EUR/CHF, September 30

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FX Rates

True to its recent habit, the US dollar is finishing the week on a firm note.  On the month, though, the greenback has fallen against most of the majors, but sterling, the Canadian dollar, and the Swedish krona.

China

The MSCI Asia-Pacific Index fell 1%, to record its largest loss in three weeks. Japan’s Topix was off 1.5%, with financials off 2.2%. Chinese stock markets managed to buck the trend to post minor gains, but even in Shanghai, banks shares ended lower. Separately, China’s Caixin manufacturing PMI edged to 50.1 from 50.0. The average in Q3 was 50.2.  That is the highest quarterly average since Q3 2014, and provides another piece of data suggesting that Chinese economy has stabilized, albeit at lower levels and with higher debt. Chinese markets are closed the next week for national holidays, though official PMI data will be reported over the weekend.

China Caixin Manufacturing PMI

Source Investing.com - Click to enlarge

Japan

Japan released a mixed bag of data. Prices pressures continue to ease.  Household spending fell more than twice what was expected. Industrial output was stronger than forecast, helped by a surge in auto output. Unemployment ticked up to 3.1% from 3.0%.

Headline CPI remained negative (-0.5% vs. -0.4% year-over-year) in August, for the fifth consecutive month. Excluding fresh food, which is the BOJ preferred measure, fell -0.5% from a year ago. The measure excluding food and energy slipped to 0.2% from 0.3%. Tokyo reports its inflation figures with less of a lag, but the September data dive little hope of a recovery in the national price measures.

Japan Construction Orders YoY

Source Investing.com - Click to enlarge

Japan Consumer Price Index

Source Investing.com - Click to enlarge

Japan Unemployment Rate

Source Investing.com - Click to enlarge

Eurozone

Eurozone data was largely in line with expectations. The unemployment rate was steady at 10.1% in August, while the preliminary September CPI rose to 0.4% from 0.2%. This picks up the gains in energy, as the core rate was steady at 0.8%.

Eurozone Unemployment Rate

Source Investing.com - Click to enlarge

Eurozone Core Consumer Price Index

Source Investing.com - Click to enlarge

Eurozone Consumer Price Index

Source Investing.com - Click to enlarge

United Kingdom

Better than expected UK data failed to lend much support to sterling.  Yesterday’s losses were extended, but the week’s low near $1.2920 remains intact. The intraday technicals warn that the low for the day, though, may not be in place.

Still, the UK could not have hoped for better data today. The Q2 GDP estimate rose to 0.7% from 0.6%, unexpectedly, but somehow, in the machinations of GDP calculations, this turned into a 2.1% year-over-year pace, down from 2.2%. Most promising for Q3 was news that the index of services for July rose 0.4%. This is the second best of the year thus far. The median forecast was for a 0.1% increase. The June series was also revised higher  (0.3% from 0.2%).

U.K. Gross Domestic Product QoQ

Source Investing.com - Click to enlarge

U.K. Gross Domestic Product (GDP) YoY

Source Investing.com - Click to enlarge

United States

There is a slew of North American data today. In the US, the personal consumption expenditures will be used to calculate Q3 GDP. After the improvement in the advance merchandise trade balance and inventory data, look for Q3 estimates to be raised again, with many, perhaps even the Atlanta Fed, returning toward 3% forecasts. The core PCE deflator, the Fed’s preferred inflation measure is expected to tick up to 1.7%, which would represent new two-year highs.

U.S. Core PCE Price Index

Source Investing.com - Click to enlarge

After personal spending growth slowed modestly one month ago, rising 3.8% Y/Y, in August US consumption once again disappointed, staying flat in the month, below the 0.1% expected sequential rebound, although this was offset by an upward revision to the last month’s data from 0.3% to 0.4%. On an inflation adjusted basis, as feeds into the GDP beancount, Real PCE dipped -0.1% in August, well below July’s 0.3% bounce, missing the expectation of a 0.1% rise while the Core PCE Index was inline with the 1.7% expected on a Y/Y basis.

At the same time, Personal Income was in line with expectations, rising 0.2% sequentially, half the July growth rate of 0.4%, or a nominal increase of $39 billion, down from $66 billion last month, of which wages comprised just $13.3 billion while personal current transfers, aka government benefits mostly in the form of Medicaid, contributed over $10 billion in income.

 And since incomes rose more than spending, the personal saving rose to $808 billion from $782 billion a month ago, resulting in another monthly pickup in the savings rate, which rose from a revised 5.6% to 5.7% in July, the highest since May, suggesting the the dramatic spending spree observed in Q1 and part of Q2 has so far to make any notable comeback.

U.S. Chicago PMI

Source Investing.com - Click to enlarge

The US dollar bottomed near CAD1.3050 yesterday and tested CAD1.32 in the European morning. However, the greenback’s momentum appears to have stalled. Similarly, the Australian dollar, which posted an outside down day yesterday, saw follow through selling today, but the enthusiasm waned below $0.7600 and near the 20-day moving average (~$0.7595). There is scope toward $0.7630-$0.7640.