Global risk sentiment and counter currency flows were the main drivers for the euro and franc’s net negative week, but we did see some short-term buying action for the euro on Thursday after the bigger-than-expected stimulus efforts from the European Central Bank (ECB).
Risk sentiment drivers for both currencies are covered in the Swiss recap below.
The Euro
European Headlines and Economic data
Monday:
Final Eurozone Manufacturing PMI at 39.4 in May (Flash: 39.5, April Final: 33.4)
Spain’s manufacturing sector remains in deep downturn during May
French Business conditions deteriorate further in May, but
at softer rate
German Manufacturing staff cuts deepen in May as
downturns in output and new orders remain severe
EU boss Michel Barnier expects Britain to make big push to break Brexit deadlock this week
Tuesday:
Germany wants to swap EU travel warning for softer guidelines this week
Spanish unemployment rises in May by 26,573 m/m
French Economy Will Contract 11% in 2020, More Hard Days Ahead: Minister
Wednesday:
Eurozone PMI rises in May but still signals severe contraction
German Service sector sees further drop in business
activity in May
French Service sector activity declines further in May
Coronavirus pushes up German unemployment, short-time work
Thursday:
European Central Bank ramps up its pandemic bond buying to 1.35 trillion euros
German coalition parties agree 130 billion EUR stimulus package
Friday:
German Manufacturing in April 2020: new orders -25.8% m/m (SA)
Italy retail sales fall 10.5% m/m in April
Brexit Talks Between E.U. and U.K. Deadlocked Again
ECB’s De Cos Says Deflation Risk Warranted More Stimulus
ECB’s Holzmann says he suggested holding off on stimulus boost
Bank of Italy Sees Economy Shrinking Between 9%-13% in 2020
The Swiss Franc
Swiss Headlines and Economic data
Monday:
Net negative start to the week for both the euro and franc. It’s likely that traders continued the focus on the “reopening trade,” supported on Monday with better-than-expected Chinese manufacturing PMI data, rather than the continued U.S.-China tensions (China cuts US ag purchases) & mass U.S. protests over the weekend.
Tuesday:
Turnover in Swiss retail trade fell by around 20% in April 2020 due to the COVID-19 pandemic
Swiss Manufacturing PMI: 42.1 in May vs. 40.7 in April
Positive risk sentiment picked up steam on Tuesday, likely on news that China bought U.S. soybeans after halt to U.S. purchases ordered, easing U.S.-China tensions a bit for traders.
Wednesday:
We saw up and down action for both the euro & franc during the London trading session, which seems to correlate with the release of European and UK PMI data (improving but still showing severe contraction). Risk-on came back during the US session on a refocus back to the “reopening trade,” and possibly on covid vaccine developments (US should have a “couple hundred million” doses of a Covid-19 vaccine by start of 2021, Fauci says).
Thursday:
Swiss Consumer prices remained stable in May
Friday:
Risk-on sentiment was in full swing on Friday during the U.S. session to send both the euro and franc lower, on the surprisingly better-than-expected jobs data from the U.S. (May sees biggest U.S. jobs increase ever of 2.5 million) and Canada (Canadian employment rose by 290,00).