The euro had one of its better weeks as it ended mostly in the green while the franc found itself in the red on speculations of negative SNB deposit rates. What’s coming up next?
Euro zone flash CPI (July 31, 7:00 am GMT)
Now that the month is about to end, another set of flash CPI readings are up for release from the euro zone. These should be particularly interesting as traders are looking out for more clues that could confirm potential ECB easing soon.
For the month of July, the flash headline CPI is projected to have slipped from 1.2% to 1.0% while the core version of the report likely likely dipped from 1.1% to 1.0%. Keep in mind that the German preliminary CPI reading is due earlier on, so this might serve as a preview for how the region’s results might turn out.
Recall that the ECB signaled scope for a rate cut in their latest policy statement, even though their official announcement indicated plans to keep rates “at their present or lower levels” at least through the first half of 2020.
Head honcho Draghi did mention that “a significant degree of monetary stimulus continues to be necessary to ensure that financial conditions remain very favorable and support the euro area expansion.”
Weaker than expected results could fuel expectations for a rate cut or additional bond purchases before the end of the year while upbeat data could keep euro losses at bay.
Overall market sentiment
In the absence of major catalysts from Switzerland this week, the lower-yielding franc might take its cues from risk sentiment once more. In particular, any geopolitical risks (cough, Brexit, cough) that spark a flight to safety might be beneficial for the Swiss currency.
Missed last week’s price action? Read the EUR & CHF price review for July 22-26!