The spotlight could stay on political goings-on in the euro zone as there are no top-tier economic reports due. Meanwhile, the franc has a big speech to watch out for.
SNB Chairman Jordan’s speech (Sept. 5, 4:00 pm GMT)
The Swiss franc has been on a tear these days as risk aversion has picked up, but folks over at the SNB might not be too happy about this!
The Swiss National Bank is infamous for intervening in the forex market to keep its currency weak in order to boost export activity and domestic inflation. It’s no surprise that market watchers are on edge when it comes to SNB commentary since officials have already been jawboning lately.
Reports already revealed that sight deposits, which are seen as a proxy to intervention, had been climbing for most of August. It doesn’t help that Swiss inflation remains lackluster while ECB easing expectations are rising.
Euro zone political updates
Italy seems to be on the verge of a political crisis (again) as Five Star Movement (M5S) and the Democrat Party (PD) are negotiating to form a new government.
Many are hopeful that a coalition could be formed within the week as Prime Minister designate Conte called on squabbling political parties to put their differences aside. So far, Italy’s 10-year yield has already tumbled to record lows and the selloff could bleed through European markets if tensions persist.
Over in Germany, politics is also a hot topic after state elections in eastern Germany. All eyes and ears are on how the Alternative for Germany (AfD) party would fare as a strong showing would mean a blow to Merkel’s government.
Exit polls are suggesting that Merkel’s center-right Christian Democratic Union (CDU) and her Social Democrat (SPD) allies are leading in Saxony and Brandenburg, respectively. Confirmation that the national coalition could stay intact might provide some relief for the euro early this week.
Missed last week’s price action? Read the EUR & CHF price recap for August 26 – 30!