A relatively strong week for both the euro and the Swiss franc, benefitting from both early week global risk aversion sentiment and from positive Brexit headlines.
European Headlines and Economic data
Euro price action was driven mainly by global risks sentiment influences and Brexit developments, which are covered more in the Swiss franc recap after The Euro section.
- Euro zone industrial output rebounds with capital goods boost
- ECB’s Holzmann calls current monetary policy ‘wrong’, hopes for new course under Lagarde
- Annual inflation down to 0.8% in the euro area; Down to 1.2% in the EU
- Euro area international trade in goods surplus €14.7B; €12.1B deficit for EU28
- ECB’s Knot wants more wiggle-room around inflation target
- ECB’s Lane says date of first rate hike depends on data
- ECB hawks demand revolution from new president Lagarde
- ECB will implement September package but review is welcome: Villeroy
The Swiss Franc
Swiss Headlines and Economic data
- A little bit of risk-off global sentiment to start off the week had traders pushing the Swiss franc higher against the majors, likely on a combination of weak economic data from China (imports and exports fell more than expected in September) and doubts began to rise on the recent ‘phase 1’ trade agreement between the U.S. and China after China says it wants more talks before signing trade deal with Trump
- Producer Prices in Switzerland decreased to 101.11 Index Points in September from 101.40 Index Points in August of 2019
- The drop in the Swiss franc during the U.S. trading session was likely on a big reversal in global risk sentiment to positive after news of a Brexit deal between the U.K. and EU was close to being drafted.
- Brexit headlines were once again the dominant market forces during the Wednesday session, first driving traders into safe havens like the franc as doubts on the Brexit deal arose after reports of the DUP not likely supporting the deal. But risk sentiment moved back into the positive by the U.S. trading session as traders saw that a Brexit delay (i.e., avoiding a no-deal Brexit was seen as positive) was still a possibility if the U.K. Parliament could not agree on the new deal.
- Swiss trade balance closed with a surplus of CHF 5.9B
- More positive risk vibes for the market on this session to send the franc lower further, likely on positive rhetoric on the U.S.-China trade negotiation front after China says it hopes to reach phased trade pact with U.S. as soon as possible, but the franc was able to quickly bounce back after headlines of Britain clinching a Brexit deal with the EU.
- No real direction for the franc on Friday’s trade as the positive risk sentiment that usually puts pressure on the safe haven continued to be cancelled out, likely on the continue positive Brexit vibes despite negative headlines for the latest Brexit deal (Boris Johnson’s Brexit deal is worse for the UK economy than Theresa May’s)