EUR & CHF Weekly Review (Mar. 9 – 13)

With the coronavirus pandemic picking up steam, it’s no surprise that both the euro and Swiss franc were once again out performers as traders continued to move away from risk assets and higher-yielding currencies. All risk sentiment related behavior for both the euro and franc are covered in the Swiss franc recap down below.

The Euro

European Headlines and Economic data

Monday:

• Germany says to help companies hit by coronavirus
• German trade balance falls to 18.5 billion euros (seasonally adjusted) in January 2020
• German industrial production up +3.0% m/m in January

Tuesday:

• Italy to suspend mortgage payments amid outbreak
• In Q4 2019, French payroll employment accelerated in the private sector and slowed down in public service
• In January 2020, French manufacturing output increased (+1.2%)
• GDP up by 0.1% and employment by 0.3% in the euro area
• Euro zone economy slowed in fourth-quarter, imports jump

Wednesday:

• Virus death toll in Italy jumps 36% to 631

Thursday:

• Italy to close all stores except for grocery stores, pharmacies
• ECB ramps up stimulus in virus fight but stops short of rate cut
• Why an off-the-cuff Lagarde comment spooked euro bond investors so much

Friday:

• Merkel Says Germany to Do Whatever’s Needed to Counter Virus
• Up to 70% of Germany could become infected – Merkel
• German CPI is up +0.4% m/m
• German Wholesale prices were down -0.9% m/m in February

The Swiss Franc

Swiss Headlines and Economic data

Monday:

• Swiss National Bank likely intervening to weaken franc, data show
• The Swiss unemployment rate fell from 2.6% in January 2020 to 2.5% in the reporting month
• Forex markets were hit with an early round of massive risk-off sentiment at the start of the week after Saudi Arabia Stuns the world with massive oil discounts in all-out price war, which was the likely catalyst for traders to move quickly into the Swiss franc right at the open of trade.

Tuesday:

• The Swiss franc slowly moved lower during the Tuesday session as traders began to speculate on potential stimulus moves coming from central banks and governments to combat the coming economic damage from the fast spreading coronavirus.

Wednesday:

• Global risk-off sentiment comes back quickly after the markets didn’t like the coronavirus response package presented by U.S. President Donald Trump, and likely on the news of the World Health Organization declaring the coronavirus outbreak a global pandemic, prompting gains in the franc against the majors, with exception to the Japanese yen (which tends to outperform all major currencies in risk aversion environments).

Thursday:

• Global risk aversion sentiment and volatility picked up early in the Asian session in reaction to what is perceived to be a  weak coronavirus response by the U.S., and on the likelihood traders were disappointed that the ECB didn’t do more to stimulate the economy (i.e., no expected rate cut) in their latest monetary policy actions.  As expected, the franc moves higher against the higher-yielding currencies while falling against the Japanese yen and U.S. dollar.

Friday:

• Broad move lower in the Swiss franc against the majors during the Friday Asia session as traders bet that more fiscal stimulus efforts from world governments would be on the way to offset the economic damage from the coronavirus.