FX: Out Of Sight But Not Out of Mind


*Norges hike on the cards
*SNB expected to hold
*SARB to hold with dovish outlook



With the Fed having delivered on its hawkish cut as markets expected, I've put together a brief preview into the less-sighted, yet still of great value, Central Bank decisions we'll see across the day.
 

Norges Bank (Norway, NOK)

Due for release at 6.00pm AEST Sep-19. 

What to expect? 
  •  25bps rate hike to 1.50% from 1.25%.
Why? 
  • Forward guidance is for the policy rate to "most likely be increased in the course of 2019".
  • Recent prints in core inflation y/y (2.1%) and Q2 GDP growth (0.7%) show a robust domestic economy that is ticking along close to policy targets.
  • USDNOK is higher ~5-6%, NOK weaker, since June. Norges are therefore unlikely to consider too strong a currency an obstruction to hiking. 
Why not? 
  • External risks in trade war uncertainty and weak global growth could drive a more cautious tone.
  • Divergence from the dovish tide of global monetary policy within the majors. 
Reaction? 
If 25bps hike: USDNOK trades lower to test support at 8.913 and further onwards 9.899 (50D-EMA). Note that USDNOK strengthened +78 pips from 8.861 after a more dovish tone in August. Though, I don't expect as much price action given the Fed's hawkish cut this morning. 

If hold, depending on the tone: USDNOK could push higher to test resistance at 8.980-85.
 

SNB (Switzerland, CHF)

Due for release at 5.30pm AEST Sep-19. 

What to expect? 
  •  No change to key policy rate at -0.75%.
Why? 
  • FX intervention more preferred tool to crack down on CHF strength.
Why not? 
  • Recent prints in GDP growth y/y (0.2% vs 0.9%e), PMIs and KOF economic barometer have been soft. 


SARB (South Africa, ZAR)

Due for release at 11pm AEST Sep-19.

What to expect?
  • No change to key repo rate at 6.50% but with a dovish outlook.
Why?
  • August CPI y/y 4.3% vs 4.2% had an expected beat. As did GDP y/y 0.9% vs 0.8% expected. 
  • Both should help keep SARB holding for this round.
  • SARB won't want to cut due to implications for November's Moody review. 
Why not? 
  • SARB could bring forward a likely November rate cut.



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