It looks like global risk sentiment & counter currency flows seemed to have accounted for the majority of the mixed price action among euro pairs this past week, with another round of weak European economic updates putting pressure on the shared currency at various times. The Swiss franc ends the week as a net loser on weak economic updates from Switzerland.
The Euro
Overlay of EUR Pairs: 1-Hour Forex Chart
European Headlines and Economic data
Monday:
- German retail sales rise slightly in August
- German joblessness unexpectedly posts first drop since April
- German economy set for weaker growth, but still showing bright spots – The weak German data on the session was like the driver for the uniform move lower in euro pairs going from the London session into the end of the U.S. trading session.
Tuesday:
- IHS Markit Eurozone Manufacturing PMI – PMI drops to lowest level since October 2012
- German manufacturing PMI drops to lowest since June 2009
- Euro area annual inflation is expected to be 0.9% in September 2019, down from 1.0% in August
- Weidmann Hits Back at Draghi Bid to Silence ECB’s QE Debate
- Despite the weak economic updates from the Euro area, euro pairs moved broadly higher on the session, likely on counter currency weakness driven by weak manufacturing sentiment survey data, most notably a much weaker-than-expected U.S. manufacturing sentiment report (US manufacturing contracts to worst level in a decade)
Wednesday:
- The euro is a net gainer on the session, once again likely on another round of risk aversion sentiment that hit the markets. This was likely on a combination of U.S. geopolitical risks (Trump impeachment probe gains steam with briefing, depositions) and Asian geopolitical risk (North Korean projectile lands in Japan’s exclusive economic zone, Tokyo says), and new trade war risks (US to impose tariffs on EU aircraft and agricultural products) on top of the global growth slowdown fears from earlier in the week.
Thursday:
- Euro area private sector close to stagnation in September
- German service sector loses momentum in September amid fall in new business
- French services activity growth eases to five-month low in September
- Industrial producer prices down by 0.5% in euro area; Down by 0.4% in EU28
- Volume of retail trade up by 0.3% in euro area; Up by 0.2% in EU28
- Tusk says EU united with Ireland on Brexit, unconvinced by British plan
The Swiss Franc
Overlay of CHF Pairs: 1-Hour Forex Chart
Swiss Headlines and Economic data
Monday:
- Swiss KOF Economic barometer falls to 93.22 from 95.45 previous – the trend lower in this economic indicator signaled that a recession may be on the way for Switzerland as industries linked to the global economy seem to be under the most pressure.
Tuesday:
- Swiss retail sales fell by 1.6% m/m in August (seasonally adjusted)
- Swiss PMI September 2019: Services sector supports economy
- Global risk aversion kicked into high gear on Tuesday, benefiting the Swiss franc after a series of weak manufacturing survey data hit from around the globe. This was highlighted by the much weaker-than-expected U.S. manufacturing sentiment report (US manufacturing contracts to worst level in a decade).
Wednesday:
- Swiss consumer prices fell by 0.1% in September – this was a big disappointed for Swissy bulls as expectations were for a rise of 0.1%. Consumer prices haven’t shown growth in four months so this is a very concerning trend that could lead to the Swiss National Bank to take action if it persists.
Thursday:
- We saw a broad move lower in the Swiss franc against the majors during the Thursday trading session, arguably on positive sentiment coming from the U.S.-China trade negotiation story after Trump says a Chinese delegation is coming to U.S. next week for trade talks, as well as speculation that the weak global manufacturing data may be enough to spark further rate cuts from the Federal Reserve.
Friday:
- No clear catalyst for the somewhat broad move higher in the Swiss franc during the morning London trading session, and it was an odd situation as global risk sentiment was broadly positive, a continuation from Thursday’s driving catalysts. The move higher could have been profit taking ahead of the weekend, but it wasn’t enough to take the franc out of net negative territory for the week.
