EUR & CHF Weekly Review (June 1 – 5)

EUR & CHF Weekly Review (June 1 – 5)

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FOREX SIGNALS

Global risk sentiment and counter currency flows were the main drivers for the euro and franc’s net negative week, but we did see some short-term buying action for the euro on Thursday after the bigger-than-expected stimulus efforts from the European Central Bank (ECB).

Risk sentiment drivers for both currencies are covered in the Swiss recap below. 

The Euro

Overlay of EUR Pairs: 1-Hour Forex Chart
Overlay of EUR Pairs: 1-Hour Forex Chart
EUR Weekly Performance from MarketMilk
EUR Weekly Performance from MarketMilk

European Headlines and Economic data

Monday:

Final Eurozone Manufacturing PMI at 39.4 in May (Flash: 39.5, April Final: 33.4)

Spain’s manufacturing sector remains in deep downturn during May

French Business conditions deteriorate further in May, but
at softer rate

German Manufacturing staff cuts deepen in May as
downturns in output and new orders remain severe

EU boss Michel Barnier expects Britain to make big push to break Brexit deadlock this week

Tuesday:

Germany wants to swap EU travel warning for softer guidelines this week

Spanish unemployment rises in May by 26,573 m/m

French Economy Will Contract 11% in 2020, More Hard Days Ahead: Minister

Wednesday:

Eurozone PMI rises in May but still signals severe contraction

German Service sector sees further drop in business
activity in May

French Service sector activity declines further in May

Coronavirus pushes up German unemployment, short-time work

Thursday:

European Central Bank ramps up its pandemic bond buying to 1.35 trillion euros

German coalition parties agree 130 billion EUR stimulus package

IHS Markit Eurozone Construction PMI: PMI signals slower, but still steep fall in construction activity

Friday:

German Manufacturing in April 2020: new orders -25.8% m/m (SA)

Italy retail sales fall 10.5% m/m in April

Brexit Talks Between E.U. and U.K. Deadlocked Again

ECB’s De Cos Says Deflation Risk Warranted More Stimulus

ECB’s Holzmann says he suggested holding off on stimulus boost

Bank of Italy Sees Economy Shrinking Between 9%-13% in 2020

The Swiss Franc

Overlay of CHF Pairs: 1-Hour Forex Chart
Overlay of CHF Pairs: 1-Hour Forex Chart
CHF Weekly Performance from MarketMilk
CHF Weekly Performance from MarketMilk

Swiss Headlines and Economic data

Monday:

Net negative start to the week for both the euro and franc.  It’s likely that traders continued the focus on the “reopening trade,” supported on Monday with better-than-expected Chinese manufacturing PMI data, rather than the continued U.S.-China tensions (China cuts US ag purchases) &  mass U.S. protests over the weekend.

Tuesday:

Turnover in Swiss retail trade fell by around 20% in April 2020 due to the COVID-19 pandemic

Swiss Manufacturing PMI: 42.1 in May vs. 40.7 in April

Positive risk sentiment picked up steam on Tuesday, likely on news that China bought U.S. soybeans after halt to U.S. purchases ordered, easing U.S.-China tensions a bit for traders.

Wednesday:

Switzerland’s GDP fell by –2.6 % in the 1st quarter of 2020, after rising by +0.3% in the previous quarter.

We saw up and down action for both the euro & franc during the London trading session, which seems to correlate with the release of European and UK PMI data (improving but still showing severe contraction). Risk-on came back during the US session on a refocus back to the “reopening trade,”  and possibly on covid vaccine developments (US should have a “couple hundred million” doses of a Covid-19 vaccine by start of 2021, Fauci says).

Thursday:

Swiss Consumer prices remained stable in May

Friday:

Risk-on sentiment was in full swing on Friday during the U.S. session to send both the euro and franc lower, on the surprisingly better-than-expected jobs data from the U.S. (May sees biggest U.S. jobs increase ever of 2.5 million) and Canada (Canadian employment rose by 290,00).

TABLE OF CONTENTS (click the following links and read again).

  Daily London Session Watchlist: EUR/GBP


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