It could be another mixed week for the euro and the franc since the lack of top-tier catalysts for both currencies could leave ’em sensitive to their counterparts’ movements.
Flash PMI readings (Mar. 22, from 8:00 am GMT)
Even though these releases don’t normally push the shared currency in a particular direction for very long, it’s still worth keeping close tabs on the results as they serve as leading indicators for business activity and overall growth.
Small dips are eyed for the flash PMI readings from the manufacturing and services sectors of Germany and France, likely dragging the region’s manufacturing PMI from 58.6 to 58.1 and the services PMI from 56.2 to 56.0.
More drama in the White House?
Based on last week’s price review, recent changes in the Trump administration tend to bring a few risk-off vibes back to the table. In that case, the lower-yielding franc often takes advantage of the flight to safety and anti-dollar action, along with the Japanese yen.
Will the Donald shake up his team once more? Word around the ‘hood is that National Security Adviser HR McMaster will get the boot next, so keep your eyes glued to the tube in case we see more market-moving drama!
Last Week’s Price Review
The euro is mixed for the week (as of 1 pm GMT). The euro’s ranking could still change, though, since the trading week is far from over and the euro’s win against the Greenback is only razor thin. Likewise, the euro only barely lost out to the Swiss.
Anyhow, the euro’s performance is not the only thing that’s mixed since the euro’s price action looks almost like a modern art masterpiece. The implication, of course, is that the euro was being kicked around by its peers.
With that said, there were bouts of uniform price action on the euro and they were all apparently due to not-so-hawkish rhetoric from ECB officials.
The first clear instance happened on Monday when the euro jumped higher and then promptly slumped lower.
As noted in Monday’s London session recap, the jump was a bit weird because the major catalysts at the time were the interviews of ECB Board Members Benoit Coeuré and Jan Smets and both ECB officials said some not-so-hawkish things, as detailed in Monday’s London session recap.
The later slide made more sense since the euro was apparently taking directional cues from the slide in Euro Zone bond yields. And the slide in Euro Zone bond yields, in turn, was attributed by market analysts to the not-so-hawkish comments from ECB officials, particularly Coeuré.
Moving on, the other clear instance of uniform price action on the euro happened on Wednesday.
And as detailed in Wednesday’s London session recap, a bunch of ECB officials were scheduled to give speeches and/or interviews and some of them touched upon monetary policy and the euro.
The most important is probably ECB Overlord Draghi’s speech wherein he reiterated his cautious message that:
“[W]e [the ECB] still need to see further evidence that inflation dynamics are moving in the right direction. So monetary policy will remain patient, persistent and prudent”
Not only that, the Draghster also took a swipe at the euro when he said that:
“The euro has appreciated since the beginning of last year, and according to our analysis, this has recently been driven more by exogenous factors … This might weigh on inflation down the line as it does not fully arise from stronger euro area fundamentals.”
The Swiss Franc
For what it’s worth, the Swissy is presently a net winner (as of 1 pm GMT). However, the Swissy’s winnings are fragile at best since it only barely edged out a win against the euro and the Greenback.
And as usual, price action on the euro and the Swissy were very similar.
As a side note, the SNB announced its monetary policy decision this week. However, that was a dud (as usual).