EUR: A relatively muted start to the week for the Euro, which hovers around the 1.1100 handle. Eurozone inflation figures showed a slight dip to 1% from 1.1%, while the core reading remained at 0.9%, further emphasising the need for ECB stimulus. That said, calls for German fiscal stimulus are also growing louder as the Bundesbank sees a risk that the German economy may fall into a technical by Q3. A fiscal stimulus package is touted to be around EUR 50bln, however, the bar is relatively high for this, given that the lower parliament would have to confirm that there is a crisis, while fiscal stimulus is unlikely to take place before monetary stimulus. Nonetheless, equity markets have been supported with the DAX rising some 1.6%, while German yields have also ticked up.
Elsewhere, focus will be on Italy, in which a no-confidence vote is scheduled to take place on Tuesday. Therefore, the passing of the no-confidence vote could add further downside risks to the Euro going forward, particularly if a snap-election is called.
GBP: Last week’s mild recovery in the Pound has stalled as the corrective move in EURGBP eases. Reports continue to highlight that the UK is preparing to leave the EU on October 31st. Eyes will be on PM Johnson who is scheduled to meet French President Macron on the 22nd. Sentiment remains bearish on the Pound; however, the psychological 1.2100 handle has held thus far.
JPY / CHF: The reprieve in risk sentiment has seen safe-havens ease slightly following reports that the US will grant Huawei another 90 days to do business with US firms. Although, given that uncertainties remain, risks remain tilted to safe-haven upside. Elsewhere, the latest SNB Sight Deposits continued to show active intervention from the central bank to stem the upside in the Swiss Franc.
WHAT’S DRIVING MARKETS TODAY
- “Canadian Dollar Price Forecast: USD/CAD Rise at Risk of Failing” by Paul Robinson, Currency Strategist
- “Gold Price Rally Primed For a Fed Boost, Silver Price Struggling” by Nick Cawley, Market Analyst
- “CAD Longs Cut, GBP Remains Bearish, JPY Longs Extended – COT Report” by Justin McQueen, Market Analyst
- “Using FX To Effectively Trade Global Market Themes at IG” by Tyler Yell, CMT , Forex Trading Instructor
— Written by Justin McQueen, Market Analyst
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