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UBS economists warn that the Swiss National Bank (SNB) is in a "delicate phase" and may need to take drastic measures, with expectations of a key interest rate cut to 0% in June. They anticipate that the SNB will intervene sparingly in foreign exchange markets to avoid being labeled a currency manipulator by the USA. A recession in the US could lead to significant fluctuations in the USD/CHF and EUR/CHF exchange rates, potentially forcing the SNB to adopt negative interest rates, which, while not ideal, would be manageable according to Chief Economist Daniel Kalt.
UBS economists indicate that the Swiss National Bank (SNB) is in a "delicate phase," anticipating a reduction of the key interest rate to 0% in June. Chief Economist Daniel Kalt suggests that the SNB will intervene minimally in foreign exchange markets to avoid being labeled a currency manipulator by the US. In a recession scenario, the USD/CHF could drop to 0.70-0.75, prompting the SNB to consider negative interest rates, which Kalt believes would not be dramatic given past experiences. A significant weakening of the Swiss franc and a halt in interest rate cuts by the European Central Bank would be necessary to prevent further reductions.
FTSE 100 banks Lloyds and Natwest are expected to remain profitable despite declining UK interest rates, according to analysts Rakkar and Dargan. However, HSBC stands out as the only bank in the index to experience a decrease in net interest income from Q1 2024 to Q1 2025.
UK consumer spending rose by 4.5% in April, driven by warm weather and the long Easter weekend, marking the largest increase since June 2023. Non-essential spending surged by 5.1%, while physical shop sales climbed 6.9% year-on-year. The Bank of England's recent interest rate cut and a new trade agreement with the US are expected to further bolster economic sentiment.
The Federal Reserve is adopting a patient approach, refraining from immediate rate cuts despite signs of weakening business and consumer confidence. Chair Jerome Powell noted that while sentiment is deteriorating, spending and employment remain resilient. However, expectations for rate cuts later this year persist, particularly as tariff rollbacks between the US and China may alleviate inflationary pressures.
USD/CNH remains under pressure, struggling to reclaim the 50-DMA resistance near 7.28. A failure to hold the 7.18 support could lead to further declines, with potential targets at 7.14 and 7.10. A brief rebound has occurred, but momentum appears to be stalling.
UniCredit SpA has upgraded its financial outlook after reporting a record net profit of €2.8 billion for Q1 2025, an 8.3% increase year-on-year. Net revenues rose 2.8% to €6 billion, driven by an 8.2% increase in fees, despite a decline in net interest income.The bank plans to enhance its portfolio across Europe and is in discussions with Italian officials regarding its takeover bid for Banco BPM SpA. Additionally, UniCredit has received ECB approval for various strategic moves, including increasing its stake in Commerzbank and initiating a €3.6 billion share buy-back program.
AUD/USD declined 0.33% to 0.6411, ending a four-week winning streak, as the US dollar strengthened amid positive trade news and the Federal Reserve's stance on interest rates. Australian superannuation funds, facing potential US recession risks, may consider increasing FX hedging, which could support the AUD/USD rate. Upcoming economic data, including employment figures, will be crucial for the currency's direction, with expectations of a possible interest rate cut by the Reserve Bank of Australia if job growth remains weak.
Barclays has issued a warning to renters and mortgage holders as spending in these areas rose by 5.2% year-on-year in April. One in four mortgage holders are making overpayments, averaging £221 monthly, to mitigate the impact of rising interest rates and council tax hikes. Despite economic uncertainties, there are signs of resilience in mortgage demand, particularly among young renters.
Wells Fargo and Standard Chartered are expressing concerns over the US dollar's future, predicting a decline due to a slowing economy and deteriorating fiscal conditions. Wells Fargo anticipates a depreciation in the dollar as the Federal Reserve may cut rates, while Standard Chartered highlights waning confidence in the dollar as a safe-haven asset amid rising budget deficits. The US has recorded a $1.31 trillion deficit this fiscal year, a significant increase from the previous year, contributing to a 7% drop in the US dollar index since February.
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Swiss National Bank faces challenges amid potential interest rate cuts
11:49 13.05.2025
Swiss National Bank faces delicate phase with expected interest rate cuts
11:07 13.05.2025
UK banks poised for profits despite declining interest rate expectations
07:00 13.05.2025
UK consumer spending rises in April driven by warm weather and Easter
01:01 13.05.2025
Federal Reserve holds rates steady but signals potential cuts ahead
15:24 12.05.2025
usd cnh faces pressure as it tests key support level near 7.18
13:52 12.05.2025
unicredit reports record profit and upgrades financial outlook for 2025
13:02 12.05.2025
aud usd retreats as super funds explore fx hedging strategies
07:47 12.05.2025
Barclays warns renters and mortgage holders of rising costs and overpayments
08:54 11.05.2025
wells fargo and standard chartered raise concerns over us dollar stability
21:56 10.05.2025
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