A mix of counter currency price action, dollar strength, and downgraded EU forecasts pushed euro pairs around last week while the franc was also on the losing end.
ZEW Economic Sentiment readings (Nov. 13, 10:00 am GMT)
First up, we’ve got a couple of leading indicators due from the region’s top economy, Germany, and the euro zone as a whole. This index is calculated based on a survey of institutional investors who are asked to rate their relative 6-month outlook for the economy.
The German ZEW economic sentiment index for the current month could tick higher from -24.7 to -24.2 to reflect a less pessimistic outlook while the region’s figure could also improve from -19.4 to -17.3.
Euro zone Flash GDP readings (Nov. 14, starting 7:00 am GMT)
The economic party could get a little more exciting by the middle of the week as the GDP readings are about to be dropped. Germany will be first to release theirs, providing a preview of how the overall readings might turn out.
The German preliminary GDP reading for Q3 could show a 0.3% contraction after the earlier 0.5% expansion. A few hours later, the region could report yet another 0.2% growth figure, but a disappointing read might lead traders to further push back ECB tightening hopes.
ECB Overlord Draghi’s speech (Nov. 15, 8:30 am GMT)
Before the trading week comes to a close, ECB Governor Draghi will grab the mic, possibly to share more thoughts on the economy and monetary policy. Recall that his latest set of remarks haven’t exactly been on the optimistic end (see below), so there’s a good chance he might reiterate these statements.
Last Week’s Price Review
The euro is headed for another losing week since the euro is currently in third-to-last place (as of 2 pm GMT).
The euro’s price action is actually a bit mixed this week (just like last week). There are also clear instances of diverging price action, which implies that the euro is still vulnerable to its peers.
However, the euro appears to have been particularly vulnerable to the Greenback, although other factors were in play a well.
The Greenback was broadly weaker from Monday until the first half of Wednesday, thanks to uncertainty surrounding the U.S. midterm elections. And for its part, the euro was bid higher on the majority of EUR pairs, except against EUR/GBP, EUR/AUD, and EUR/NZD.
The Greenback finally regained its footing on Wednesday and spurted higher on Thursday because of the FOMC statement, so the euro was forced to give back its gains.
Aside from Greenback strength, the euro also appears to have been dragged down by ECB Overlord Draghi since the Draghster warned that:
“The protectionist trade measures implemented may have had very limited effects thus far, but the escalation of trade tensions is undermining confidence.”
Moreover, Draghi said the following about the ECB’s monetary policy:
“If things were to go worse, then we can always extend the period of time, we can always change our forward guidance consistently with the incoming information.”
The euro also appears to have been hit by selling pressure because of the E.U.’s Autumn 2018 Economic Forecast since the E.U. downgraded its growth forecasts while also signaling that Italy could go deeper into debt next year.
Anyhow, the euro did finally get some respite on Friday, apparently because of somewhat positive comments from Italian Economy Minister Giovanni Tria and because the Greenback’s rally stalled.
Demand for the euro was only short-lived, though, since the Greenback resumed its upward march.
The Swiss Franc
The Swissy is mixed but a net loser for the week (as of 2 pm GMT), so the Swissy is still on track for another losing week.
And as usual, EUR and CHF pairs had roughly similar price action. In fact, EUR and CHF had very similar price action this week.
The euro initially had the upper hand, though, likely because of the prevalence of risk appetite for most of the week.
However, risk aversion prevailed on Friday and that apparently allowed the safe-haven Swissy to finally outpace the euro.