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Currency traders were bearish on both the euro and Swiss franc this week, possibly on growing fears of a new wave of coronavirus cases/lockdown speculation.

We also saw weakness at the end of the week after disappointing European business sentiment data and commentary from the ECB.

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:

Germany’s Finance Minister Proposes 10 Billion-Euro Plan to Safeguard Jobs

France records more than 3,000 new Covid-19 cases for second day in a row

Italy to shut nightclubs and make masks compulsory after spike in cases

Tuesday:

The $425 billion payment holiday question hanging over Europe’s banks

Wednesday:

Italy PM says to present recovery plan to EU by mid-October

In June 2020 the current account of the euro area recorded a surplus of €21B, compared with a surplus of €11B in May 2020.

In July 2020, Annual inflation up to 0.4% in the euro area; Up to 0.9% in the EU

Euro zone bond yields fall; German 30-year tap sees “outstanding” demand

Spain, France And Germany Report Most Coronavirus Cases Since Their Lockdowns

Thursday:

ECB Signals September to Be Key Month to Read the Economy – there is still too much uncertainty on whether or not the broad economy is truly recovering after lockdown measures were eased. This event seems to correlate with a pick up in broad euro selling against most of the majors.

German Producer prices in July 2020: -1.7% on July 2019

Friday:

Flash Eurozone PMI Composite Output Index at 51.6 in Aug. vs. 54.9 in July, mainly driven by a drop in the services sector – spike lower in the euro after this disappointing read on business sentiment, and likely on disappointing news on the Brexit front (EU, Britain trade blame after scant progress towards post-Brexit dealEU’s Barnier says little progress in latest talks with UK)

In August 2020, the flash consumer confidence indicator remained broadly stable in both the euro area (0.3 points up) & the EU (0.1 points up) compared to July

With Coronavirus Cases Surging, Europe Braces for New Phase in Pandemic

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

With no major drivers from Switzerland and broad risk sentiment move generally muted, the broad move lower through Monday and Tuesday in the franc was likely driven by the euro, which as described above, likely driven by fresh headlines of COVID-19 cases spiking in Europe.

Wednesday:

A strong move lower in the Swiss franc against the majors starting in the morning London session. With no major drivers apparent from Switzerland. This may have been driven by broad U.S. dollar strength ahead of the FOMC meeting minutes and/or broad euro weakness as pandemic fears grew.

Thursday:

Swiss Trade recovered in July 2020: seasonally adjusted exports rose by 1.1 percent to CHF 17.7B; imports rose by 2.5 percent to CHF 15.1B.

Friday:

The broad move lower in the franc against many of the majors during the London trading session was likely a move with the euro, falling after disappointing business sentiment and Brexit updates came out from Europe.