EUR-avin’ a laugh.
The Commission sits today to discuss the future of the Italian budget. The Euro found support on Friday and throughout the weekend whilst EU Commission President Juncker proclaimed that there was no risk of Italy leaving the Euro. Labelling the secessionist forces that threaten to drag Italy away from Eurozone membership as suicidal, Draghi allayed some investors’ fear surrounding European macro-political risk. The Euro also received a boost alongside the Pound Sterling as weekend rumours of a private Brexit deal within number 10 began to gather pace. Despite positive news on a post-Brexit trading relationship and a diminution of intra-Union risk, the Euro failed to make ground through 0.8800 within EURGBP and failed to sustain momentum above 1.14 against the Dollar. The Pound received a bid at market open having gained considerable momentum in the preceding Asian session. With the UK cabinet meeting tomorrow, Brexit remains at centre stage with an impromptu November summit many investors’ first-case scenario. With domestic political uncertainty and leadership challenges still on the cards, agreement on the European stage does not presuppose a future relationship. The race for the Senate and House is on with US mid-term elections taking place on Wednesday. Former President Obama took to the campaign trail against incumbent President Trump with polls suggesting the race is too close to call. Success for the Democrats at the mid-term elections will limit the efficacy of the Republican controlled White House and government to progress with political decision making. It is likely, therefore, that the Dollar would face a considerable headwind if Democratic support comes out stronger than expected. Emerging market currencies continued to consolidate today with the Turkish Lira and the South African Rand both gaining considerable value. Later this month, the South African Reserve bank will meet to produce a much-awaited monetary policy decision.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – Two tales of a weaker Dollar
Charles Porter
Thu 5 Sep 2024
Two tales of a weaker Dollar As the week that should decide the fortune of the US Dollar continues to unfold, this brief looks at the two very different legacies of a weaker Dollar. For emerging markets-EM and other high beta currency classes, a weaker Dollar can both act as a tail wind and a […]
Daily Brief – Not just about rates
Charles Porter
Tue 10 Sep 2024
The focus of next week’s Bank of England-BoE decision will not just be about benchmark interest rates. At a time when central bank meetings are most often scrutinised for clues regarding the outlook for domestic interest rates, this particular BoE meeting will have an important distraction. The next monetary policy decision is due next Thursday. […]
Daily Brief – Enough Labour Already!
Charles Porter
Tue 3 Sep 2024
Enough Labour Already! And no, I’m not talking about UK politics here. Despite the new UK government attracting significant attention in markets and the press ahead of the awaited/feared Autumn budget, this briefing is about the labour market. This week holds in store a plethora of US labour market data which is likely the biggest […]
