It was a net negative week for both the euro and the Swiss franc as price action seems to have been mostly driven by broad risk sentiment, counter currency flows, and an arguably net negative round of economic and business sentiment updates from Europe.
The Euro
European Headlines and Economic data
Monday:
German Consumer price indext for August 2020: -0.1% m/m, 0.0% y/y
Spanish Flash CPI for August stands at -0.5%
Portugal’s exports slump 40% in second quarter, stoke record GDP fall
ECB policy calibrated to deal with pandemic resurgence, says Schnabel
Tuesday:
Spanish Manufacturing sector recovery stalls in August
Italian output rises sharply in August amid further revival of client demand
German Business conditions continue to recover across manufacturing sector during August
Modest growth of eurozone manufacturing sector sustained
Euro area annual inflation down to -0.2% – Euro weakness was likely sparked by this economic updates at this was the first time we’ve seen a negative inflation read since 2016. This puts pressure on the ECB to increase stimulative measures, i.e. likely increasing their bond purchasing program.
Euro area unemployment at 7.9%; EU at 7.2%
ECB’s De Guindos sees bank consolidation in euro zone starting soon
German Joblessness Falls Again Amid Revival of Economic Activity
Wednesday:
German Retail turnover in July 2020: -0.9% m/m in real terms
Spain’s unemployment rises amid new COVID outbreaks, tourist restrictions
Industrial producer prices up by 0.6% in euro area; Up by 0.4% in EU
Thursday:
Final Eurozone Services Business Activity Index: 50.5 in August vs. 54.7 in July
German Business activity growth slows in August; Index slips to 52.5 from 55.6 in July
French service sector growth index eases from 57.3 in July to 57.3 in August
Spanish service sector returns to contraction
Rising euro stokes ECB worries over falling prices
Volume of retail trade down by 1.3% in euro area; Down by 0.8% in EU
Barnier’s comments are misleading on Britain’s trade talks position, says PM’s spokesman
Euro zone public deficit levels unsustainable, ECB’s Wunsch says
Friday:
Eurozone Construction PMI: downturn quickens in August
German Manufacturing in July 2020: new orders up 2.8% on the previous month
The Swiss Franc
Swiss Headlines and Economic data
Monday:
Swiss retail trade turnover rose in July 2020 by 3.4%
Tuesday:
Both the euro and the franc fell during the Tuesday session, possibly falling on the broad positive risk sentiment environment (continued strength from the U.S. tech sector), but also on euro weakness after a disappointing inflation number (likely sparking speculation of more stimulus ahead).
Thursday:
Swiss consumer prices remained stable m/m in August; -0.9% y/y
The euro and franc’s shift into rally mode was likely driven by the shift in global risk sentiment turned negative. This was likely triggered by the net negative sentiment and economic updates from around the globe (e.g., Eurozone Services Business Activity Index: 50.5 in August vs. 54.7 in July, 115,762 U.S. Job Cuts in August, recovery in China’s services sector loses a step)
Friday:
The euro and franc turned lower during the U.S trading session as broad risk sentiment flipped positive after the London session close, possibly on the better-than-expected U.S. employment update or arguably on signs of an imminent deal to avoid a U.S. government shutdown.
