Yen and Swiss Franc Strengthen As Market Sentiment Normalize

The Japanese yen and Swiss franc are stabilizing, followed by the Euro. Today’s market focus is on a new coronavirus type, which has sent global stocks and benchmark government yields substantially lower. As the general market mood calmed, the currency markets remained in a consolidative phase today. Major European indices are recouping some of last week’s losses, while US futures indicate a higher start. But it’s unclear whether this is merely a dead cat bounce or a reversal.

The eurozone economic sentiment indicator fell from 118.6 to 117.5 in November. The industry confidence index fell from 14.2 to 14.1. Trust in services increased from 18.0 to 18.3. Consumer confidence fell from -4.8 to -6.8. Confidence in retail increased from 1.9 to 3.7. Building confidence increased from 8.6 to 9.0. The employment expectations indicator rose from 113.9 to 115.6, the highest level since January 2018.

EU ESI dropped from 117.6 to 116.5. The employment expectations indicator rose from 114.2 to 115.6, the highest level since January 2018. Among the largest EU economies, the ESI rose in France (+3.0), Italy (+0.9), and Poland (+0.5). In contrast, confidence deteriorated in Spain (-2.6), the Netherlands (-2.1), and Germany (-1.7).

Vice President Luis de Guindos said in Madrid today that “the economic situation is characterized by a high degree of uncertainty with” outbreaks of infections “and” the emergence of new options. “ He warned that the possible withdrawal of policy support measures should be treated with great caution. It is important for monetary policy that all opportunities remain open.

De Guindos reiterated that inflation factors are “temporary”. And he expects inflation to start falling next year.

Swiss Franc Rises As Risk Sentiment Falls

The Swiss franc has nudged higher on Monday, after gaining more than 1% at the close of the week. USD/CHF is currently trading at 0.9245, up 0.20 percent for the day. Omicron, a new Covid version, has swept the globe, instilling dread and panic in financial markets.

Travel restrictions were implemented swiftly, but the variety appears to have spread without difficulty. Oil prices and equities fell sharply this week, while safe-haven currencies like the Swiss franc and the Japanese yen rose.