There was no love for the euro and Swiss franc this week, likely due to weak economic updates from Europe and a rebound in the Greenback.
European Headlines and Economic data
Upturn in German manufacturing continues in January, despite growing risks from supply chain disruption – At 57.1 in January, the headline IHS Markit/BME Germany
Manufacturing PMI remained firmly inside growth territory, albeit down from December’s near three-year high (58.3) and the lowest for four months.
“The seasonally adjusted IHS Markit France Manufacturing Purchasing Managers’ Index posted 51.6 in January, up from 51.1 in December”
“The improvement in business conditions was partially driven by a return to growth in new orders during January. The result marked the first increase in sales since October.”
Spain’s operating conditions deteriorate in January – “Storm Filomena and increasing delays in the delivery of inputs all hampered production and market activity. Job shedding subsequently intensified, although confidence about the future was little changed on December’s near two-and-a-half year high. “
Italian Manufacturing recovery strengthens in January – “Italy’s manufacturing recovery continued into 2021, according to the latest PMI data, with conditions improving at the sharpest rate since March 2018. Output growth was the fastest for three months, while the upturn in inflows of new work quickened to a solid pace.”
“According to a first estimation of annual growth for 2020, based on seasonally and calendar adjusted quarterly data, GDP fell by 6.8% in the euro area and 6.4% in the EU.”
Flash estimate – January 2021 Euro area annual inflation up to 0.9% – All sectors were higher with exception of energy, which was down -4.1% in January vs. -6.9% in December
December 2020 Industrial producer prices up by 0.8% m/m in the euro area; Up by 0.9% m/m in the EU – “The annual average industrial producer prices for the year 2020, compared with 2019, decreased by 2.6% in the euro
area and by 2.4% in the EU”
Service sector leads further contraction of eurozone economy – IHS Markit – “Services was once again the main drag on the economy, with activity in this sector contracting for a fifth successive month and also at a sharper rate
than in December. Manufacturing remained a bright
spot, with production rising for a seventh successive
month albeit at the lowest rate in this growth
The IHS Markit Eurozone Construction Total Activity Index fell from 45.5 in December to 44.1 in January
Commercial building activity fell for the eleventh successive month in January, and at the sharpest rate since last May.
The decline in construction output across the eurozone was driven by falls in each of the three largest economies in the region.
German manufacturing new orders were down 1.9% m/m in December – “Domestic orders decreased by 0.9% and foreign orders decreased by 2.6% in December 2020 on the previous month. New orders from the euro area went down 7.5%, and new orders from other countries increased by 0.5% compared with November 2020.”
In Q4 2020, French payroll employment dropped by 0.2% – “Over the year as a whole in 2020, it declined by 1.8% (that is -360,500 jobs), after five years of successive increases.”
The Swiss Franc
Swiss Headlines and Economic data
U.S. Censure Won’t Stop SNB FX Interventions, Central Bank Chief Says – “Switzerland really isn’t a manipulator,” Jordan told SRF’s ECO program. “We have to find a way to create favorable monetary conditions so that the Swiss economy can develop and doesn’t sink into deflation. At the moment these foreign exchange interventions are very important.”
Swiss Industry defies the second corona wave – In January 2021, the procure.ch Purchasing Managers ’Index (PMI) at 59.4 points and thus 2.1 points higher listed as in December 2020
SECO Consumer sentiment falls in January to -15 VS. -13 in October – “Figures for January show that the sentiment remains gloomy among Swiss households. Their expectations have taken a particular downturn when compared to October. All sub-indices are still well below their long-term average.”