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SNB and BoE keep rates on hold; Philly Fed manufacturing index fell in June

Jun 22 • Morning Roll Call • 83 Views • No Comments

On Thursday the investors were closely monitoring the interest rate decisions of Swiss National Bank and Bank of England, where both have their interest rates unchanged. The SNB left the benchmark of interest rates at record-low levels, while signaling that it is prepared to take any further action required to weaken the franc. The interest rate remained unchanged at -0.75%, a move that was widely expected, while the rate statement that was released after the decision stated that the Swiss franc remains highly valued, while the Swiss National Bank would remain active in foreign exchange market as deemed necessary. In addition, Bank of England has kept the interest rates on hold, again a widely expected decision, however an August rate hike is seen as highly possible as policymakers have observed the slowdown of the economy in the first quarter as temporary occurrence.

The decision to keep the interest rate unchanged was split, where 3 out of 9 members voting in favor of a quarter point increase. Nevertheless, all MPC members are agreeing that the prospect of future rate hikes are going to be at a gradual and predictable pace. The UK economy is expected to grow by 0.4 percent in the second quarter after the stagnation in the previous three months.

Another important macro-economic news closely monitored yesterday was the Philly Fed index which unexpectedly fell in June to 19.9 from 34.4 in May. The expected reading was 28.9. The report indicated that the firms were continuously reporting higher prices for purchased inputs and their manufactured goods, and looking at the next six months, the firms remain optimistic.

Unemployment claims reading on Thursday showed that the number of Americans that are filing for unemployment benefits fell, giving an indication of further tightening in the labor market. Initial claims decreased 3k, to a seasonally adjusted 218k, while the forecast was 220k, which is a decline for 4 straight weeks now. Given the numbers, the labor market is approaching full employment with the jobless rate at an 18 year low of 3.8%.

ECONOMIC CALENDAR EVENTS FOR JUNE 22nd

EUR French Flash Manufacturing PMI
EUR French Flash Services PMI
EUR German Flash Manufacturing PMI
EUR German Flash Services PMI
EUR Flash Manufacturing PMI
EUR Flash Services PMI
ALL OPEC Meetings
CAD CPI m/m
CAD Core Retail Sales m/m
CAD Retail Sales m/m
CAD Common CPI y/y

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