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.
The Euro
European Headlines and Economic data
Monday:
Germany ‘looking towards recovery’ as industry drives up business morale
“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.”
German economy likely to shrink before new bounce, Bundesbank says
“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.”
Belgium Business confidence firms up again in February to -4.4
ECB is ‘closely monitoring’ nominal bond yields, Lagard says
“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
Tuesday:
Annual inflation up to 0.9% in the euro area; Up to 1.2% in the EU in January 2021
Thursday:
ECB soothsaying does little for bonds caught in global rout
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 broad monetary aggregate M3 stood at 12.5% in January 2021, after 12.4% in December 2020
“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”
Euro zone yields jump even as Lane reiterates ECB support
Friday:
ECB’s Schnabel says rise in nominal yields may be welcome
Schnabel says ECB may need to add support if yields hurt growth
German import prices in January 2021: -1.2% on January 2020
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
Tuesday:
Swiss Producer and Import Price Index rose by 0.3% in January
Wednesday:
Swiss franc’s pummeling from reflation trade eases SNB headache
“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.
Thursday:
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.
Friday:
Swiss economy shrinks by better-than-feared 2.9% in 2020
The KOF Economic Barometer rose to 102.7 points in February, which is slightly above its long-term average of 100.
