SNB Tremors Still Being Felt
Good Monday morning and welcome to the week after the week that the Swiss National Bank (SNB) shook the world. The tremors are still being felt around the financial markets after the normally reliable and stable Swiss removed the peg to the Euro in a move that has been viewed as a “once in a generation” event. Such was its impact that the Swiss Franc, long considered a safe haven, was showing more volatility than the Russian Rouble. The impact this move had on trading and spread betting companies and Banks started to show on Friday as everyone seemed to be caught on the hop.
This week, things may well go back to normal and as such the focus will be on Mario Draghi and the ECB. Whilst the announcement of the introduction of Quantitative Easing by Draghi on Thursday has been expected for the last couple of weeks, the question has now turned into “How much is he going to put into the market?” Due to last week’s events, we should probably expect it to be more than was originally thought. The move by the SNB has further weakened the ECB stance and so for QE to have the desired effect, we will need to see a more aggressive, and so more costly, investment.
With rumours swilling round the market that the Danish Central Bank may also be considering removing their peg to the Euro, these are certainly testing times.
The US is avoiding all these issues as it strengthened further on Friday with news that consumer sentiment grew to its highest level in 11 years, way above expectations. To celebrate this, the US markets are treating themselves to the day off, although this is officially noted as Martin Luther King Jr Day.
Today is a very quiet day with no major releases but expect a theme of nervousness and volatility to continue.