A handful of medium-tier reports and the ECB minutes are all lined up for this week. How might the euro react to these?
German economic data (starting Oct. 7, 6:00 am GMT)
Since Germany is the biggest economy in the bloc, it’s no surprise that its data tend to serve as a preview for the region’s overall economic performance. And since there have been some signs of a slowdown for this top dog, euro traders are quick to react to any confirmation that a recession is looming.
This week, Germany has its factory orders, industrial production, trade balance, and final CPI readings due. Expectations aren’t really on the up and up, so it wouldn’t be surprising to see another leg lower for the shared currency.
The factory orders report lined up for Monday’s London session could show a 0.4% drop for August, a slower decline compared to the earlier 2.7% drop. The industrial production report, which might generate a stronger reaction, is up for release on October 8, 6:00 am GMT and is expected to show a 0.2% dip following the earlier 0.6% decline.
On Thursday’s London session, the German trade balance will be released and this could show a smaller surplus of 19.4 billion EUR for August compared to the earlier 20.2 billion EUR figure. Lastly, the final CPI reading due on Friday could stay unchanged at its flat reading.
ECB monetary policy meeting accounts (Oct. 10, 11:30 am GMT)
In their September policy decision, the ECB cut its deposit rate by 10 basis points and restarted its asset purchases to the tune of 20 billion EUR each month starting in November. Draghi explained:
“In view of the weakening economic outlook and the continued prominence of downside risk, governments with fiscal space should act in an effective and timely manner.”
While most market participants saw these easing moves coming, it was still a bit surprising to see some signs of discord within the committee. The minutes of their monetary policy pow-wow should provide more deets on their disagreements.
Officials from Germany, the Netherlands, Austria were against asset purchases from the very beginning while France didn’t seem to be on board with the timing of asset purchases.
Low-tier Swiss data (starting Oct. 7, 7:00 am GMT)
It’s not every week that the Swiss economy prints economic reports, so even these low-tier ones could be worth paying attention to.
First up is the SNB foreign currency reserves, which is considered an indication of the central bank’s currency market operations a.k.a. how actively they are trying to keep the franc from appreciating too strongly. The previous read was at 767 billion CHF, so an increase from here might signal that the SNB is sneaking in some intervention moves.
Next we’ve got the Swiss unemployment rate for September, which is expected to have fallen from 2.3% to 2.1%. Now this figure has actually been on a steady decline over the past couple of years, so another strong improvement might be bullish for the Swiss franc.
Missed last week’s price action? Read the EUR & CHF price recap for September 30 – October 4!