With a week to go, the Scotland question continues to roll through markets but the latest round of survey data has seen a slight recovery for the pound. An opinion poll carried out by the company Survation gave the ‘No’ camp a 6 point lead going into the last seven days of the campaigns. 47.6% of respondents would vote for a continuation of the currency union while 42.4% would vote for independence.
On a day when GBPUSD hit a fresh 10-month low through the morning session, the release of this poll will come as a welcome surprise. The outlook for sterling through the next seven days is very difficult to call. If, like us, you believe that the referendum will eventually result in a ‘No’ vote then we can easily foresee a relief rally, especially should the last run of opinion polls due on Wednesday all show the unionist argument in the ascendency. The schedule of fresh polls into the independence vote are for another YouGov survey over the weekend and possibly one from ICM as well. Final polls from Ipsos Mori, Survation, and YouGov are due Wednesday.
Today also brings us news that isn’t related to the Scottish question. The New Zealand Dollar has once again been taken lower by the thoughts of the Reserve Bank of New Zealand. “It is prudent to undertake a period of monitoring and assessment before considering further policy adjustment,” Governor Graeme Wheeler said after the Official Cash Rate was kept at 3.5%. The Bank’s inflation forecasts dipped this month for the next 12 months from 1.8% in June and 1.6% currently to 1.4%.
Expectations of when inflation will hit the Bank’s 2% target have been extended from Q3/4 2015 by another 12 months.
Similar to the noises from the Australian central bank, the RBNZ Governor said he expects “a further significant depreciation” in the New Zealand dollar, which “has yet to adjust materially to lower commodity prices.” NZD is down 0.7% against the USD and 0.9% against sterling this morning. Aussie dollar has run higher after an absolute moon-shot of an unemployment report. 121,000 jobs were added to the Australian economy in August against an expectation of 15,000. As someone pointed out that is the equivalent of 6,000 people every working day – Australian recruiters will all be driving Lamborghinis by the end of the week. Whether this figure is strictly accurate will remain to be seen – the Australian statistics organisation did change their sampling methodology in July – but for now the AUD is taking it to heart.
Some Aussie strength has been shaded away however by falls in iron ore prices and a poor Chinese inflation report overnight. CPI in China fell to 2%, the lowest level in four months, confirming fears that domestic demand remains weak moving forward and that a further injection of monetary stimulus could be on the cards. Producer price inflation remained in negative territory as overcapacity and the lack of confidence fuelled demand continued to bite.
President Obama last night announced plans to arm and train rebel forces in Syria in concert with an air offensive in the country. This plan has been not approved by Congress and maybe it is just the cynic in me, but it does come the night before the anniversary of the 9/11 terror attacks. Oil was unmoved by the announcement.
The Swiss National Bank gave its clearest indication that its current monetary policy stance may have to shift in response to the pressure of a weaker euro. Swiss National Bank member Thomas Moser told reporters yesterday that negative rates were a possibility and would be used if needs be. CHF weakened by the most in six months, dragging EURCHF to a three week high. We still have a constructive view on GBPCHF – it is essentially GBPEUR with a free bet on intervention, and we can easily see the SNB keeping up their part of the bargain should the single currency maintain its weary decline.
This afternoon’s initial jobless claims numbers are the data highlight of the session. We look for a figure around the 300k ‘new normal’ and for USD to maintain its recent run of strength.
Disclosure: I appeared this morning on BBC Radio 5 Live’s financial breakfast show ‘Wake Up To Money’ in a special programme looking at the currency possibilities and implications of the Scottish referendum. A recording of the show is available here for the next 7 days.