The ECB led the way with a 25 basis-point rate cut, but the real surprise was the Swiss National Bank, which slashed rates by 50 basis points to 0.5%! The SNB cited uncertainty in Europe, arising from the war in the Ukraine and Trump trade/tariff policies, which apparently required monetary stimulus. The ECB also cut rates, but by a more modest 25 basis points, weighed by the same concerns, but restricted by the resurgent inflation within the Eurozone. Winter in Europe this year may be difficult, as economic conditions remain grim, while energy prices ensure the pain continues. In the US the PPI, wholesale prices measure of inflation, spiked sharply higher. The rise follows the rise in CPI inflation, which was only marginal, but directional. The ECB undermined the currency, with the EUR dipping below 1.0500, while the GBP attempted to hold 1.2700.The important Australian Unemployment number surprised many, falling sharply below 4%, adding pressure on the RBA to cut rates. This did not enable the currency, with the AUD flailing below 0.6400, while the NZD struggles to regain 0.5800. Local markets await the Tankan report and later the UK GDP growth numbers, but expectations are low.
