Financial market research and analysis

The Swiss National bank is left with an unpleasant aftertaste amid the ECB President Draghi decided to speed up the monetary expansion through more QE and / or even deeper negative rates.

Euro has slipped below the 1.08 mark against the franc. A fresh wave of weakness in the euro will certainly force the SNB to get up to the speed on its monetary conditions. Following January 15 damages however, there is little chance for the SNB to set an explicit target on its exchange rate. The SNB will be tempted to defend the franc within 1.07/1.05 zone depending on how strong the pressure for cheaper euro will be to the end of the year.

SNB total sight deposits increased to  CHF 467.0bn from 465.9bn as of October 23rd data.

The euroswiss futures advanced to 100.84 as a rapid euro slide could bring back the possibility of a rate action back on the table.

Nestlé and Swatch Group made a grouchy start to the week as investors don’t see light at the end of the tunnel yet. Franc appreciation, combined with deepening slowdown in China, could well keep investors’ optimism contained.

Money doesn’t buy happiness.

By a surprise action on Friday, China cut its interest rate by an additional 25 basis points and removed the deposit rate ceiling for banks to further foster growth amid GDP slipped below 7.0% in 3Q. Shanghai’s Composite gapped higher at the open yet failed to gain above 3457.5 mark. Looser monetary conditions across the board lend support to stock prices, while rising concerns on economic slowdown injects a half-hearted cheeriness in the market.

FTSE and European stocks are subject to some profit takings following the ECB’s power boost last week.

The BoJ could add further stimulus at its meeting this week. USDJPY rallied to 121.56, Nikkei stocks gained 0.65%.

The FOMC is expected to remain on hold this week, the market gives 6% probability for a rate hike to happen as soon as this week. According the latest CFTC report, the speculative USD longs retreated to lowest in more than a year.  USD is weaker against all of its G10 peers. The broad USD weakness presently gives support to EURUSD above 1.10 and USDJPY above 120.00.