It was a relatively quiet week for Europe in terms of economic data, but the data and commentary from ECB officials we did get was very negative and likely the main driver for both the euro and the franc’s under performance.
Counter currency flows seemed to have been an influence on the mid-week mixed behavior, but at the end there were buyers to be found of both currencies by the close of Friday.
Risk sentiment was arguably a factor as well in spurts, describe below for both currencies in the CHF recap.
European Headlines and Economic data
ECB ready to do more to avoid euro ‘fragmentation’: Schnabel – this may have been the catalyst for the euro’s turn lower, not only on the idea of more stimulus coming, but also on the fragility of the euro zone’s debt market and the ECB’s negative outlook on the economy.
The Swiss Franc
Swiss Franc Headlines and Economic data
Broad moves lower in both the euro and franc on the Monday session, perhaps a move on global risk sentiment which somewhat shifted positive to start the week after OPEC+ agrees on a record oil production cut to end the price war during the weekend.
We started to get terrible global economic outlook projections (e.g., Coronavirus ‘Great Lockdown’ to shrink global economy by 3% in 2020: IMF) that possibly sparked a broad move towards negative risk sentiment, reasonably the catalyst for a move higher in euro and franc against the risk currencies going from Tuesday into Wednesday.
We saw a broad move in global risk sentiment towards positive in the afternoon U.S. session after prospects of the U.S. having a plan to re-open the economy (Trump suggests U.S. states re-open economies in three phases in new guidelines) and from a recent report that a Gilead Sciences drug showed effectiveness in treating the coronavirus.