Both the euro and Swiss franc were net winners this week as global risk aversion pushed traders into lower-yielding / safe haven assets.
European Headlines and Economic data
- The Coronavirus story was the major market driver for the week, pushing traders out of “riskier” assets into less riskier assets and safe havens. This is why we saw the euro and Swiss franc beat out most of the majors, with exception to the Japanese yen (which usually gets the most love during risk aversion environment) and the British pound (bullish sentiment after the Bank of England refrained from cutting interest rates). We highlight more Coronavirus stories in the Swiss franc review below.
- The ifo Business Climate Index fell from 96.3 points in December to 95.9 points in January
- ECB Mersch warns loose policy raises risk of market drop
- Spain’s jobless rate falls in fourth quarter to lowest level in 11 years
- Six euro zone banks fall short of ECB capital demands
- Abating risk could push euro zone growth higher: ECB’s Rehn
- Consumer morale rises unexpectedly in Germany, France, Italy
- German Import prices in December 2019: -0.7% on December 2018
- EU parliament gives final approval to Brexit deal
- German employment up 0.6% on the same month a year earlier
- Euro area unemployment at 7.4%; EU28 at 6.2%
- German Retail turnover in December 2019: +0.8% in real terms on December 2018
- Shock drop in Italian and French economies amid wider European worries
- Euro area annual inflation up to 1.4%
- Preliminary flash estimate for the fourth quarter of 2019 GDP up by 0.1% in both euro area and EU28
The Swiss Franc
Swiss Headlines and Economic data
- Major global risk-off sentiment to start off the week after the mayor of Wuhan, epicenter of coronavirus outbreak, says 5 million people left the city before travel restrictions were imposed.
- Risk aversion sentiment grows as China confirms 2,700 cases of virus, 40 counted elsewhere.
- As mentioned above in the euro review, the traders were fleeing to safe havens like the Swiss franc right at the start of the week.
- Switzerland posted its highest ever trade surplus in 2019; Booming pharmaceuticals exports increased the merchandise trade surplus by nearly a fifth to 37.3 billion Swiss francs
- Risk aversion behavior picked up quickly on the session, once again on Coronavirus fears as there was nearly 1,500 new cases in a few days and the death toll rose to 132.
- KOF Economic Barometer improves to 100.1 from 96.2 previous
- Coronavirus declared global health emergency by WHO
- Swiss retail turnover reported declining turnover figures in December 2019
- Risk aversion accelerates once again during the Friday session as the US raises travel warning, Singapore bans Chinese travelers as outbreak spreads. Also, the U.S. declares coronavirus a public health emergency.