Partner Center Find a Broker

The euro gets a little bit of love this week after the announcement of a new recovery fund by the European Commission.

The Swiss franc takes a hit for the week, likely on a combination of early positive risk sentiment, weak Swiss economic updates, and commentary from the Swiss National Bank that they are more willing to intervene in the currency markets if necessary.

The Euro

Overlay of EUR Pairs: 1-Hour Forex Chart
Overlay of EUR Pairs: 1-Hour Forex Chart
EUR Weekly Performance from MarketMilk
EUR Weekly Performance from MarketMilk

European Headlines and Economic data

Monday:

German economy enters recession as GDP falls 2.2%

Germany’s Ifo Index rises above forecasts in May

Slight recovery in Belgium business confidence in May

Tuesday:

ECB’s Villeroy: inflation target is symmetrical, flexible and mid-term

German consumer morale improves slightly, job fears remain high: GfK

ECB Says Euro Area Still on Shaky Ground as Economy Reopens

Lane hints at way ECB can skirt German court ruling

Wednesday:

EU unveils plan to borrow 750 billion euros to aid economic recovery  (PEPP)- up until this announcement, the euro seemed to have been mostly influenced by the positive risk sentiment environment as it outperformed the “safe havens”, while underperforming against the higher-yielding currencies. This plan was seen as a historic first step since Germany was always against jointly-issued debt, but the process to finalize the plan will likely take some time as there are fiscally conservative countries looking to put stipulations on those loans and grants.

ECB’s Lagarde says Europe’s pandemic slowdown probably won’t be mild

German employment outlook improves slightly: Ifo

Thursday:

German Expected inflation rate for May 2020: +0.6%

Spanish Flash CPI at -1.0% in May

German businesses don’t expect quick return to normal: Ifo

Friday:

German Import prices in April 2020: -7.4% on April 2019

German Retail turnover in April 2020: -6.5% in real terms on April 2019

Annual growth rate of broad monetary aggregate M3 increased to 8.3% in April 2020 from 7.5% in March

Euro area annual inflation down to 0.1%

The Swiss Franc

Overlay of CHF Pairs: 1-Hour Forex Chart
Overlay of CHF Pairs: 1-Hour Forex Chart
CHF Weekly Performance from MarketMilk
CHF Weekly Performance from MarketMilk

Swiss Headlines and Economic data

Tuesday:

Swiss foreign trade surplus falls to CHF 4.3B

Broad positive risk sentiment (continued  recovery hopes and vaccine development news) was likely the driver for the Swiss franc on Tuesday as it outperformed the other “safe havens” while underperforming against the higher-yielding currencies.

Wednesday:

Swiss National Bank says expansive policy more important in pandemic

The broad, sudden move higher against the majors during the U.S. trading session was likely on a shift in risk sentiment towards negative, this time possibly on geopolitical tensions rising (e.g., U.S. weighs sanctions on Chinese officials, firms over Hong Kong, China approves controversial national security bill for Hong Kong).

Thursday:

We see a somewhat broad move higher in the franc against most of the majors, possibly on a bit of safe haven flows as geopolitical tensions rise (Riot police deployed in Hong KongChina approves controversial national security bill for Hong Kong)?

Friday:

Coronavirus pushes KOF Swiss economic indicator to record low of 53.2

Coronavirus makes normalisation of SNB policy more unrealistic – Zurbruegg

A strong pop higher in the franc against the majors during the U.S. trading session didn’t seem to have any direct catalysts. It’s likely Swiss franc traders were focusing on geopolitical issues during this move as the main broad market stories of the day were once again focused on U.S.-China issues (Trump orders his administration to begin eliminating Hong Kong privilegesHong Kong government warns removing U.S. special status is ‘double-edged sword’)