The euro and Swiss franc came out as a net winners this week, arguably benefiting from counter currency weakness as rising global aversion sentiment took down the higher-yielding / risk currencies.
Risk sentiment was driven mainly by the Coronavirus theme that’s been driving the markets for weeks now, a story that worsened this week (updates covered in the Swiss recap section below) as new cases pop up around the globe.
European Headlines and Economic data
- New orders in main German construction industry in December 2019: -4.8% m/m seasonally adjusted
- German GDP (Final read): 0.0% on the previous quarter; +0.3% on the same quarter a year earlier
- Too early for the ECB to contemplate coronavirus response: Makhlouf
- ECB had ‘heated’ debate on inflation target, Holzmann says
- Euro zone governments should use budget measures to support growth: Lagarde
- Outbreak spreads in Europe from Italy
- The annual change in the flash estimate of Spanish CPI stands at 0.8% in February
- Annual Euro area growth rate of broad monetary aggregate M3 increased to 5.2% in January 2020 from 4.9% in December 2019
- ECB signals rising worry over coronavirus spread
- German Import prices in January 2020: -0.9% on January 2019
- German employment up 0.5% on the same month a year earlier in January
- ECB’s Weidmann: No need for immediate monetary policy action due to coronavirus
- French consumer pulls back even before coronavirus outbreak
The Swiss Franc
Swiss Headlines and Economic data
- Coronavirus cases outside China surge, prompting traders to start traders the new week in fear mode and really staying that way through Friday. The Swiss franc tends to benefit against the majors in this type of environment, falling only to the euro and Japanese yen (usually the biggest benefactor of risk aversion environments) at the end of the week.
- Coronavirus further isolates Iran, strains South Korea, Italy – the Swiss franc continued to out perform the higher-yielders / risk currencies on continued news of the accelerated spreading around the globe.
- Negative rates necessary for Switzerland – SNB’s Maechler
- New coronavirus cases outside China exceeded those in China for the first time, WHO says