The euro and Swiss franc both tumbled against the US dollar and Japanese yen on Monday as risk trends drove price action rather than fundamentals.
The Euro-zone trade balance posted a surplus for the third straight month in June. Indeed, exports only fell by a seasonally adjusted 0.1 percent during the month, compared to a drop of 1.8 percent in May, while imports went unchanged after tumbling 2.5 percent in May, all of which put the trade balance at a seasonally adjusted 1 billion euros. Meanwhile, Swiss retail sales rose during June at a rate of 0.9 percent from a year ago, up from -1.4 percent in May. That said, this is a highly volatile indicator and isn’t necessarily indicative of a jump in consumption. From a technical perspective, EURUSD broke below an intraday trendline connecting the July and August lows, which warrants a bearish bias on the pair. On the other hand, USDCHF remains contained to a tight range, but breakout potential is very high.
Looking ahead to Tuesday morning, a steady rally in European equities throughout July to the highest levels since Q3 2008 is likely to underpin the case for a rise in German investor sentiment for the month of August. The ZEW survey on the economic outlook is forecast to rise to a more than 3-year high of 45 from 39.5, while sentiment on current conditions is projected to edge up to 7-month high of -85.5 from -89.3. Surprisingly strong results could lead the euro to gain following the news on a very short-term basis, but disappointing data would likely have a greater impact, and could trigger sharp declines in the currency.
[B]Check out the Daily Fundamentals in its entirety for a look at what happened across the majors.
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