The euro taken down by traders as the possibility of a hard Brexit rose substantially this week. And the franc was a net winner despite a positive week for global risk sentiment and dovish comments from the Swiss National bank, possibly a deviation from its usual correlation with the euro, benefiting from its weakness instead.
European Headlines and Economic data
- German Manufacturing continues to weigh on private sector output
- Eurozone malaise extends in December, ending worst quarter since 2013
- French private sector growth continues despite broad stagnation in manufacturing
- China threatens retailiation should Germany ban Huawei 5G
- The euro tops out and reverse to the downside for the week on the session, likely on the news of the latest version of the Brexit bill from the U.K. government that will rule out an extension to transition period.
- ECB should refine inflation target, aim for more flexibility – Coeure
- Extremely challenging’ timetable for UK trade deal, warns European Commission president
- Bank of Italy’s Visco urges ECB to aim for transparency in top ranks
- Annual inflation up to 1.0% in the euro area; Up to 1.3% in the EU
- ECB rates can still go much lower, staff research shows – the move lower in the euro against the majors correlate with this report.
- In December 2019, the DG ECFIN flash estimate of the consumer confidence indicator decreased in the euro area (by 0.9 points), while it remained broadly stable in the EU (−0.3 points).
- Euro traders make one more push lower into the weekend, possibly on the news that a January Brexit wins the endorsement from a new U.K. Parliament, possibly without a trade deal in place and/or the possibility of a deal settled by the end of the transition period.
The Swiss Franc
Switzerland Headlines and Economic data
- As mentioned in the euro recap, the possibility of a hard Brexit returned to trader’s minds to push both the euro and Sterling lower, which was likely why we saw the Swiss franc rally around the same time frame.
- The franc broadly moves lower on the Friday session, possibly moving with the euro and Sterling weakness, or it could be on the rising global risk sentiment sparked by improving U.S.-China trade developments (Xi Jinping says ‘phase one’ trade deal benefits both US and China, seeks to sign as soon as possible)