EUR/CHF steadies after softer PMIs, inflation data in focus

The Euro (EUR) holds firm against the Swiss Franc (CHF) on Tuesday as traders digest a heavy slate of Eurozone economic data. At the time of writing, EUR/CHF trades around 0.9289, snapping a two-day losing streak.

The HCOB Composite Purchasing Managers Index (PMI) edged down to 51.5 in December from 51.9 in the previous month, signalling that private-sector activity continued to expand but at a slower pace. The Services PMI also eased to 52.4 from 52.6.

Data from Germany added to the mixed picture. The HCOB Composite PMI slipped to 51.3 in December from 51.5. In contrast, the Services PMI ticked up to 52.7 from 52.6 in the bloc’s largest economy, keeping services activity in expansion territory.

Spain’s services sector showed stronger momentum at the end of the year. The HCOB Services PMI rose to 57.1 in December from 55.6.

Elsewhere, Italy’s services activity lost traction, with the HCOB Services PMI slipping to 51.5 from 55. In France, business conditions remained fragile. The HCOB Composite PMI fell to 50.0 from 50.1, while the Services PMI eased to 50.1 from 50.2.

Traders now look ahead to German inflation data due later in the day, followed by preliminary Eurozone inflation figures on Wednesday, which could provide fresh insight into inflation dynamics across the bloc and help shape expectations around the European Central Bank’s (ECB) monetary policy path.

Economists expect inflation pressures to remain broadly steady. Preliminary figures are forecast to show Eurozone Core HICP rising 2.4%YoY in December, unchanged from the previous reading, while headline HICP inflation is seen easing slightly to 2.0% from 2.1%.

On the Swiss side, domestic data painted a weaker picture for business activity. The SVME Purchasing Managers’ Index fell sharply to 45.8 in December from 49.7, pushing deeper into contraction territory and underscoring ongoing softness in Switzerland’s manufacturing sector.

Investors will also turn their attention to Swiss inflation data due on Thursday. Economists expect the Consumer Price Index (CPI) to fall 0.1% MoM in December after a 0.2% decline previously, while annual inflation is forecast to tick up slightly to 0.1% from 0.0%.

Any downside surprise could reinforce concerns about persistently low inflation and increase pressure on the Swiss National Bank (SNB) to consider a return to negative interest rates.