There’s not much in the way of top-tier data from both the euro zone and Switzerland this week, but here’s why their respective currencies might still enjoy big moves.
Medium-tier Swiss data
Report-free weeks are common for the Swiss economy, so it’s definitely worth paying close attention when data points are lined up. These could give clues on what the SNB’s next moves might be and whether or not they might be getting uncomfortable with franc strength.
First up is the retail sales report due on Monday’s European session. After printing a 0.7% year-over-year drop in the previous month, a rebound of 0.6% is expected for May.
Later on, the Swiss manufacturing PMI will be released and might show a slight improvement from 48.6 to 48.9, which would indicate a slower pace of industry contraction.
On Thursday, Switzerland will print its CPI reading for the month of June and a 0.1% dip is eyed. A larger than expected drop in price levels could put traders on alert for SNB jawboning or intervention threats as policymakers tend to blame franc strength for weighing on domestic inflation.
Friday has the SNB foreign currency reserves data due and some believe that major changes in this figure might be indicative of actual central bank intervention. The previous read was at 760 billion CHF, which is slightly above-average for the level of reserves, so another increase could keep a lid on franc gains.
Overall market sentiment
It’s no secret that risk appetite has been a major driving force for the euro and franc over the past few weeks as these lower-yielding currencies tend to benefit from risk-off flows and dollar weakness.
Markets seem to be off to a positive start this week thanks to the lack of major tensions during the G20 Summit meeting between Trump and Xi, which could keep a lid on safe-haven demand early in the week.
Still, there are other major catalysts coming up that might change this dynamic. Traders are looking forward to the June U.S. NFP report due Friday as this could seal the deal for a Fed cut (or maybe even two!) within the year.
This suggests that a huge disappointment could be dollar bearish and in turn bullish for the euro and franc. Leading indicators lined up throughout the week would likely lead market participants to start pricing in expectations ahead.
Missed last week’s price action? Read the EUR & CHF price review for June 24 -28!