FXT Economic Data Summary (Asia-Pacific | 08/27)

Swiss Investor Confidence Continues to Improve

Swiss investors became more optimistic about the economic outlook in August. A survey by UBS and the Swiss CFA Society showed that the investor sentiment index rose from 10.0 in July to 12.1, remaining positive for a second consecutive month and reaching its second-highest level since January 2025. The current conditions index also increased from 6.7 to 8.8, indicating improving assessments of both the present economy and the outlook.

Views among analysts also became more divided. The share expecting the Swiss economy to remain broadly unchanged over the next six months fell by roughly half, with more respondents moving toward either optimistic or pessimistic expectations. FXT analysis suggests that the continued improvement in sentiment points to a recovery in economic expectations, although growing divergence highlights persistent uncertainty over the outlook.

U.S. Inflation Remains Elevated

U.S. PCE data showed little easing in price pressures in July. Headline PCE rose 0.2% month on month, compared with a 0.1% decline in June and above the 0.1% forecast, while annual inflation held at 3.7%, slightly above expectations of 3.6%. Core PCE increased 0.2% monthly and remained at 3.3% annually, both in line with forecasts. Personal income rose 0.4%, above the 0.2% estimate, while spending increased 0.2%, also exceeding expectations of 0.1%.

Stronger income growth and resilient spending suggest that U.S. demand has yet to cool significantly, slowing the disinflation process. Although core inflation did not accelerate further, its 3.3% annual rate remains well above the Federal Reserve‘s 2% target. FXT analysis suggests that the data are unlikely to change the Fed’s cautious stance, with future policy still dependent on clearer signals from inflation and employment data.

Australian Core Inflation Remains Firm

Australias headline CPI eased from 3.8% to 3.5% year on year in July but remained above the 3.2% forecast. Monthly CPI rebounded from a 0.1% decline to a 1.0% increase, slightly above expectations of 0.9%. The adjusted CPI measure closely watched by the RBA remained at 3.6% annually, above the 3.5% forecast, while monthly growth accelerated from 0.3% to 0.5%. This suggests that underlying price pressures remain persistent despite the decline in headline inflation.

Housing prices rose 5.0% annually, new dwelling prices increased 5.7%, food and non-alcoholic beverages gained 3.2%, and restaurant meals and takeaway food rose 4.5%. Transport inflation accelerated from 0.1% to 1.6%, while fuel prices jumped 7.5% month on month. RBA minutes had already discussed the case for pre-emptive tightening, with some members seeing a higher likelihood of another rate increase. FXT analysis suggests that persistent core inflation and renewed monthly price momentum continue to support expectations for a September rate hike.

ECB Tightening Expectations Rise

ECB Executive Board member Isabel Schnabel reinforced expectations for further monetary tightening. She said that at current interest rates, euro-area inflation is unlikely to return sustainably to the 2% target over the medium term, meaning additional tightening may be necessary. Persistently high energy costs and continued economic resilience leave the ECB with limited room to end its tightening cycle prematurely. Following the June rate increase, attention is increasingly focused on another possible move in September.

Schnabel is particularly concerned about higher energy prices feeding into wages and broader goods and services inflation. Waiting until these second-round effects become entrenched could leave monetary policy behind the curve. Although she did not specify how many additional rate hikes may be needed, her comments indicate that policy will remain driven by inflation developments. FXT analysis suggests that further tightening remains likely as long as energy and wage pressures stay elevated, making the September meeting a key point for the ECBs next policy steps.

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