Article Highlights

  • Swiss KOF leading indicator: 101.7 vs. 102.1 previous
  • Euro Zone business climate: 0.77 vs. 0.83 expected, 0.77 previous
  • Euro Zone consumer sentiment: -4.7 vs. -4.9 expected, -4.9 previous
  • German HICP m/m: -0.8% vs. -0.7% expected, 1.0% previous
  • German HICP y/y: 1.9% vs. 2.0% expected, 1.7% previous
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The euro and the Swissy both slumped hard across the board during today’s morning London session. Meanwhile, the Greenback was in recovery mode and the safe-haven yen got bid even higher.

Major Events/Reports:

Gloomy start in Europe – Europe is starting the week on a downbeat mood, since most of the major European equity indices were in the red.

  • The pan-European FTSEurofirst 300 was down by 0.75% to 1,436.10
  • The blue-chup Euro Stoxx 50 was down by 0.88% to 3,273.50
  • Germany’s DAX was down by 0.76% to 11,724.70
  • The U.K.’s FTSE 100 was down by 0.71% to 7,133.25

U.S. equity futures were also feeling the weight of the downbeat mood.

  • S&P 500 futures down by 0.28% to 2,282.50
  • Nasdaq futures down by 0.34% to 5,144.88

Market analysts are pointing to risk sentiment spillover from the Asian session, with the ultimate blame falling on jitters over Trump’s new policy that bans immigration from some Muslim countries.

Swiss to hold referendum on tax breaks – According to a report from Reuters, Switzerland’s tax break on international companies is about to end. And the Swiss cantons are expected to have a referendum on extending, reforming, or scrapping it this February. Because of this tax break, international companies only have to pay the 7.8% federal on some Swiss cantons. But if reforms are implemented, then the tax rate would rise to 14%. This has caused some concern for international companies doing business in Switzerland, of which around 24,000 would be affected, Reuters reports. And some of these international companies have already communicated that they would hold off on further investment until they get the outcome of the referendum.

ECB’s Nowotny speaks – ECB Governing Council Member Ewald Nowotny was speaking earlier. And according to him, the ECB will be discussing its economic assessment in June. However, Nowotny added that “this is not a tapering discussion.”

Nowotny also talked about rates later, saying that:

“One would start with tapering first, so a reduction of the liquidity measures, and only at a later stage it would be sensible to take action on the interest rate policy.”

Major Market Movers:

JPY – The yen likely benefited from the risk-off vibes since it was the best performing currency of the session. Although it’s also possible that yen shorts were taking profits off the table ahead of the upcoming BOJ statement.

USD/JPY was down by 10 pips (-0.09%) to 114.59, CHF/JPY was down by 59 pips (-0.52%) to 114.22, EUR/JPY was down by 89 pips (-0.72%) to 121.83

CHF – The Swissy was the second worst-performing currency of the session, despite the downbeat mood. And that was very likely linked to the report about Switzerland’s planned tax break referendum.

USD/CHF was up by 45 pips (+0.45%) to 1.0033, NZD/CHF was up by 27 pips (+0.38%) to 0.7267, AUD/CHF was up by 20 pips (+0.26%) to 0.7558

USD – The Greenback was in recovery mode during the session. There was no direct catalyst for the recovery, though. And Trump didn’t really post anything major in his Twitter.

GBP/USD was down by 45 pips (-0.35%) to 1.2509, AUD/USD was down by 15 pips (-0.20%) to 0.7533, NZD/USD was down by 6 pips (-0.09%) to 0.7243

EUR – Despite the slide in European equities, the euro ended up as the worst-performing currency of the session. There were no apparent catalysts for the earlier weakness, although ECB Nowotny’s later statement that the ECB has no plans to taper its QE program noticeably caused the euro to weaken further.

EUR/USD was down by 72 pips (-0.68%) to 1.0627, EUR/CAD was down by 77 pips (-0.55%) to 1.3981, EUR/CHF was down by 23 pips (-0.22%) to 1.0664

Watch Out For:

  • 1:30 pm GMT: U.S. personal income (0.4% expected, 0.0% previous)
  • 1:30 pm GMT: U.S. personal spending (0.5% expected, 0.2% previous)
  • 3:00 pm GMT: U.S. pending home sales (1.1% expected, -2.5% previous)
  • 9:45 pm GMT: New Zealand’s visitor arrivals (0.5% previous)

See also:

Asian Session Recap 
Last Week’s Top Forex Movers

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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