• SNB’s Jordan repeats that CHF is overvalued Swiss National Bank Chairman Thomas Jordan said in an interview that CHF remains overvalued, reaffirming the Bank’s readiness to intervene in the markets if it becomes necessary. He said that there is no limit on the size of SNB’s balance sheet and that the current negative interest rates “have worked very well”. Even though CHF has weakened significantly against USD and GBP, to reach levels before the 15th of January event, with less than a week ahead of the ECB’s policy meeting, the likelihood for another “surprise” by the SNB is high. Expectations for further easing by the ECB have increased recently, as such, the SNB could cut rates further into the negative territory to weaken CHF against the EUR.
• Overnight, the Australian private capital expenditure fell much steeper than expected in Q3. The figure continued to contract, declining for the fourth straight quarter. This suggests that the rebalance from the mining sector remains challenging for the nation. Added to the sluggish growth in China and the falling iron ore prices, it makes it more likely that the RBA will have to cut rates again. However, given the recent comments by the RBA Governor Glenn Stevens that the markets should “chill out” on prospects for another rate cut, I don’t expect the Bank to act at its next week meeting. The Australian dollar tumbled against USD, but I still expect the currency to continue strengthening against its New Zealand counterpart due to prospects that the Reserve Bank of New Zealand will cut interest rates next month.
• Today’s highlights: During the European day, Eurozone’s M3 money supply for October is forecast to have risen at the same pace as in September. If the forecast is met, the 3-month moving average is expected to have slowed slightly. While this figure is not a major market mover, it could give an extra sign that the ECB should do more to boost liquidity into its financial system in order to achieve price stability. Germany’s Gfk consumer confidence index for December is also coming out.
• The US financial markets will be closed for the Thanksgiving Day holiday. As a result, we could see increased volatility due to the thin liquidity.
• We have no speakers on Thursday’s agenda.