The first week of a brand-new month typically brings a bunch of low-tier leading indicators from the euro zone, but other catalysts might steal the show.
EU Economic Forecasts (Nov. 8, 11:00 am GMT)
The latest set of estimates from the top dogs of the European Commission themselves would likely provide a glimpse of how they foresee Italy’s budget issues and Brexit uncertainties playing out.
While any major downgrades could spur bearish moves for the shared currency, it seems more likely that the EC might seek to provide some reassurance. Still, the euro’s reaction might hinge on how officials say they are prepping their contingency plans.
Yes, to some extent Brexit developments are affecting euro price action these days as well! And why wouldn’t they? After all, the region comprises the U.K.’s counterparty in this rather messy breakup!
Word on the street is that PM May has a proposal for the Irish border backstop up her sleeve already and that European Commission officials might be ready to compromise as the clock winds down. With that, any indication that a deal could finally be struck would bring a lot of relief for the shared currency while further tension could drag it down.
Last Week’s Price Review
The euro is mixed for the week (as of 12 pm GMT). The euro’s price action is also mixed. And there are even clear instances where EUR pairs had diverging price action, which implies that the euro was vulnerable to opposing currency price action.
There were some top-tier reports for the Euro Zone and the euro did react uniformly to some of them. However, the euro’s price action quickly became mixed after the knee-jerk reaction.
Anyhow, there were rumors on Monday that German Chancellor Angela Merkel no longer plans to run as the CDU Party Head because of disappointing regional election results over the weekend, which caused the euro to slide broadly lower due to speculation that Merkel may also resign as Chancellor.
However, the DPA later claimed that while Merkel has no plans to run for re-election as CDU Party Head, Merkel still plans to stay on as German Chancellor. And so the euro bounced back and then turned in a mixed performance after that.
Aside from that, the euro also slipped during Tuesday’s London session, thanks to disappointing GDP reports for Italy and the Euro Zone as a whole. But like on Monday, the euro’s price action devolved into a mixed mess within a few hours.
EUR pairs then traded roughly sideways on Wednesday and didn’t really respond to the latest batch of inflation reports.
However, the euro did appear to have been a secondary beneficiary of a report from The Times which claimed that Theresa May has supposedly hammered out a deal for the very important British financial services industry.
And a side note, Theresa May’s spokesman later shot down The Times report, but that didn’t seem to faze euro bulls (and pound bulls).
Moving on, the euro also appears to have benefited from a Bloomberg report which cited “four people familiar with the matter” as claiming that Trump “has asked key U.S. officials to begin drafting potential terms” for a trade deal with China.
However, it’s also possible that the euro was just feeding off the Greenback’s weakness in the run-up to the NFP report.
The Swiss Franc
The Swissy’s stay at the winners’ club is apparently short-lived since the Swissy is currently trailing behind in second-to-last place (as of 12 pm GMT).
EUR and CHF pairs actually had roughly similar price action (as usual). However, the Swissy underperformed the euro throughout the week, very likely because of the risk-friendly vibes this week.