Can risk aversion extend its stay in the markets this week? If so, the euro and franc might be poised for yet another set of rallies! Here’s what’s up.
German Ifo Business Climate (8:00 am GMT)
The focus might switch back to fundamentals early in the week as the euro zone’s top economy is scheduled to release the results of its Ifo Business Climate survey for August. Number crunchers are expecting to see a dip from 95.7 to 95.1, which would reflect a bit of a dip in economic health.
Keep in mind that this composite index is seen as a leading indicator of performance and that it has been on the decline since April this year. With that, another fall could signal that the worst ain’t over for the region, likely keeping ECB easing expectations in play.
Euro zone flash CPI (Aug. 30, 9:00 am GMT)
Since traders are on the lookout for any factors that could impact ECB policy, the upcoming flash CPI readings might also spur a stronger price reaction than usual.
Although the region’s overall numbers are up for release on Friday, the readings from its top economies like Germany and Spain due the previous day might drop some hints. The euro zone flash headline CPI could show another 1.0% figure while the core figure could tick higher from 0.9% to 1.0%.
Weaker than expected results could tip the scales in favor of additional asset purchases from the ECB or even rate changes before the end of the year.
Overall market sentiment
If last week’s price action is any indication, it’s that the euro and the franc are still highly sensitive to changes in market sentiment. Heck, the shared currency managed to shrug off Germany’s recession fears and Brexit-related concerns when it surged on the tariffs announcement!
Missed last week’s price action? Read the EUR & CHF price recap for August 19 – 23!