Despite broad risk sentiment being generally negative all week, both the euro and Swiss franc were net losers as traders likely focused on rising COVID-19 cases, rising odds of lockdowns returning to Europe, and continued Brexit uncertainty.
Price action was rarely uniform for either currency, suggesting counter-currency flows were also a major factor in relative performance this week.
The Euro
Overlay of EUR Pairs: 1-Hour Forex Chart
EUR Weekly Performance from MarketMilk
European Headlines and Economic data
Monday:
European Central Bank to review bond-buying tool launched in response to pandemic
ECB’s Lagarde Says Stimulus Can be Ramped Up Amid Uncertainty
Germany’s economic rebound set to slow further- Bundesbank
ECB attentive to euro’s appreciation: Lagarde
Hungary could have up to 200,000 virus cases under worst-case scenario: PM
Tuesday:
EU-UK Brexit talks challenging, Simon Coveney claims
Flash consumer confidence for September, +0.8 in the euro area; +0.6 in the EU (0.6 points up) compared to August.
ECB should err in doing too much rather than too little: Panetta
EU-UK Brexit talks challenging, Simon Coveney claims
Wednesday:
Flash Germany Manufacturing PMI at 56.6
(Aug: 52.2). 26-month high
Flash Eurozone Manufacturing PMI at 53.7 (51.7 in August).
ECB Must Limit Emergency Powers to Temporary Crises, Mersch Says
EU chief negotiator ‘determined’ to get Brexit deal but will be firm
Thursday:
German Ifo business climate index rises in September
German business morale brightens despite coronavirus resurgence
Belgium Business confidence picks up again slightly in September
ECB Hands Banks $203 Billion in Cheap Cash to Boost Lending
Dutch daily COVID cases hit new high, also pass 100,000 in all
EU/UK trade deal will fail if divorce treaty threatened, Ireland says
It appears Italy and Germany won’t be able to avoid a second wave of the pandemic.
Friday:
Annual growth rate of broad monetary aggregate M3 decreased to 9.5% in August 2020 from 10.1% in July (revised from 10.2%)
Villeroy Says ECB Should Consider Tweaking Its Inflation Goal
France reports over 1,000 people in ICU due to coronavirus
The Swiss Franc
Overlay of CHF Pairs: 1-Hour Forex Chart
CHF Weekly Performance from MarketMilk
Swiss Headlines and Economic data
There were no major headlines from Switzerland between Monday through Thursday, but risk sentiment was generally negative due to rising coronavirus cases and fears of renewed lockdowns.
Unfortunately for franc and euro bulls, this wasn’t supportive as most of the fears were focused on Europe where various countries were seeing record numbers. This was likely the reason for the atypical behavior of euro and franc weakness during a risk aversion environment, only gaining against the Kiwi and Aussie by the close of the week.
On Thursday, the Swiss National Bank kept policy on hold (sight deposit rate stays at -0.75%). The SNB said that the economic downturn in Switzerland was not as bad as expected, and that the franc remains highly valued. They are now forecasting a 5% contraction in 2020.
SNB Reacts to Intervention Criticism, Keeps Pledge on Franc
Overall, the monetary policy statement came in as expected and likely contributed to the intraweek trend lower in the Swiss franc.