The euro ends the week as a net loser as weak economic updates and a dovish ECB meeting minutes shifts sentiment to the negative, while the Swiss franc benefited greatly from U.S. dollar weakness.
The Euro
European Headlines and Economic data
Monday:
- Conservative party wins Greek election, ousts left-wing PM
- German exports, industrial production up slightly in May
- Euro zone investor morale falls further in July, German recession looms: Sentix
Tuesday:
- In May 2019, Italian retail trade fell an estimated 0.7% m/m, the fourth consecutive month of no positive growth
- ECB Seen Readying the Pumps for Return to Massive Bond Buying
Wednesday:
- French Industrial Output Soars in Bright Spot for Euro Zone
- Italian industrial production posted an adjusted 0.9% m/m expansion (-0.8% MoM in April)
- The forecast for euro area GDP growth in 2019 remains unchanged at 1.2%, while the forecast for 2020 has been lowered slightly to 1.4%
Thursday:
- IMF sees prolonged anemic growth in euro zone, urges ECB stimulus
- ECB meeting minutes: Need to prepare for policy easing – the euro seems to have topped out for the week and taken a turn for the worse after these two headlines, which seems to have increased the odds greatly in traders’ minds that we will get some sort of stimulus package from the ECB at the end of July
Friday:
- German wholesale prices drop a hefty -0.5% vs. 0.3% previous – this correlates with a sharp turn lower in euro pairs, likely on the idea that this number signals a high probability of consumer price inflation falling in Germany
- Industrial production up by 0.9% in euro area; Up by 0.8% in EU28
The Swiss Franc
Swiss Headlines and Economic data
Tuesday:
- Swiss unemployment rate falls to 2.1% from 2.2% in May – this event correlates with the start of a bullish move in the Swiss franc against the majors all the way into the Thursday trading session, but it’s also likely the franc benefited from bearish moves in both the euro and the U.S. dollar during this time period.
Thursday:
- A brief pullback in franc pairs during the U.S. session is arguably a reaction to U.S. dollar strength, a move sparked by the better-than-expected U.S. CPI data released earlier in the session, and possibly a sympathy move lower with the euro as there were calls for more stimulus from the ECB from the IMF and the ECB monetary policy meeting minutes.
Friday:
- It looks like Swiss franc pairs saw one last broad bullish push higher during the U.S. session. This is likely on U.S. dollar weakness growing into the weekend after more Fed rate cut rhetoric from Fed members.
