The Euro locked in gains against the major currencies this week, while the Swiss franc takes a dive as it loses some of its safe haven status among traders.
European Headlines and Economic data
“Ifo said its business climate index increased to 92.4 from an upwardly revised 90.3 in January, hitting its highest level since October and surpassing even the strongest forecast in a Reuters poll of analysts.”
“The Bundesbank also played down a rebound in inflation, which it blamed mainly on changes in the price index, and it noted salary increases were moderate.”
“While the trend suggests optimism in the recovery, it could also stymie the rebound by boosting the cost of financing the massive public and private-sector debt burdens built up during the pandemic. The ECB has pledged to keep financing conditions favorable until the crisis is past.”
“If euro-zone sovereign yields continue to move higher in coming weeks, it’ll leave the ECB no choice but to step up their purchases with the pandemic emergency purchase program to counter this undesirable tightening of monetary conditions” – UniCredit group chief economist Erik Nielsen
German consumer morale improves more than expected heading into March: GfK – “The GfK research institute said its consumer sentiment index, based on a survey of around 2,000 Germans, improved to -12.9 points from a revised -15.5 in February.”
“Annual growth rate of adjusted loans to households stood at 3.0% in January, compared with 3.1% in December”
“Annual growth rate of adjusted loans to non-financial corporations stood at 7.0% in January, compared with 7.1% in December”
Import prices, January 2021
+1.9% on the previous month
Export prices, January 2021
+0.9% on the previous month
+0.1% on the same month a year earlier
The Swiss Franc
Swiss Headlines and Economic data
“The franc weakened as much as 0.5% against the euro to hit the lowest since October 2019. Against the dollar, it fell to levels last seen in December. The currency’s sharp slide comes as bond yields climbed the world over and copper hit a multi-year high.”
As bond yields climb quickly, the sovereign debt of other countries became much more attractive safe havens, prompting moves out of the Swiss franc strongly this week.
Negative risk sentiment sparked by rising bond yields accelerated on Thursday, prompting a bounce in the Swiss franc, most notably against the “risk” currencies like the Aussie, Kiwi, and Canadian dollar.