The Euro

European Headlines and Economic data
- Euro area annual inflation down to 1.4%
- Euro area unemployment at 7.8%
- Volume of retail trade up by 0.4% in both euro area and EU28
- Eurozone Composite PMI -Manufacturing downturn weighs on euro area growth in March
- Italian unemployment rate rises to 10.7% vs. 10.5% previous
- Germany Suffers Double Blow on Factory Slump, Downgrade
- ECB debated risk of low rates for too long: accounts
- Europe Eyes Brexit Dangers as Concerns Mount Over Slowing Growth
- Business investment rate up to 23.7% in the euro area
Major Market Drivers for the Euro
Euro pairs were very messy at the beginning of the week, likely influenced more on counter currency influences and global risk sentiment than the European economic updates on Monday (final manufacturing PMI, inflation estimates, and the unemployment rate). We’d say the economic data was net negative as the manufacturing data showed contractionary conditions (below 50 reads) and the CPI in weaker-than-expected at 1.4% vs. 1.5% previous.
We began to see a somewhat uniform tilt to the upside starting on Tuesday and Wednesday, possibly on the rising global risk-on sentiment (positive China data and U.S.-China trade negotiation reports) and the better-than-expected reads on European services PMI data, which hit 55.4 in March–the highest read since September. The rise in global risk sentiment also helped German bund yields recover from their recent move into negative territory, with the 10-yr German bund yield trading back above 0.0% on Thursday and closing at 0.005% at the end of the week.

Closing out the rest of the week, price action was choppy as we got a hiccup in European data on Thursday (German factory orders data showed that the global slowdown was taking a toll on export orders), but then a positive update on Friday as German industrial production bounced higher on a surge in construction. Overall, euro pairs were able to hold on to net gains despite counter currency drivers like the strong U.S. jobs data and oil rally likely taking away from the euro’s end of week rally.
The Swiss Franc

Swiss Headlines and Economic data
- Swiss retail trade turnover falls slightly in February 2019
- Swiss National Bank has scope to go further into negative rates
- Consumer prices increased by 0.5% in March
- Maechler defends negative interest rates against pension fund fears
Major Market Drivers for the Swiss Franc
As usual, the Swiss economic calendar was relatively light but had more updates than usual with retail sales, manufacturing PMI, and consumer prices data in the line up. We’d say they were arguably net negative with retail sales and manufacturing PMI data disappointing, but overall, these were low tier events so it’s no surprise that they didn’t spark any significant reaction from forex traders.
But we did get one market reaction from a Swiss catalyst, which was the bearish lean on the franc after comments from Swiss National Bank governing board member Martin Schlegel. He reiterated the SNB’s intervention pledge, and that negative rates are essential and could go more negative. This event correlated with broad uniform sell off in the Monday morning European session.
Besides that, franc were as usual, trading closely with euro as seen below and reacting to global risk sentiment, bond yields, and counter currency flows. Global risk sentiment was probably the biggest driver this week. Markets were in a positive mood off of surprise positive Chinese data and signs of the U.S.-China trade negotiations getting closer to a deal, which likely drove traders away from safe haven assets (like the Swiss franc) and probably explains the franc’s under performance against the euro all week.

