EUR/USD Whipsaws as Germany Mulls U-Turn on Fiscal Stimulus - US Market Open
MARKET DEVELOPMENT – EUR/USD Recovers as Germany Mulls U-Turn on Fiscal Stimulus
AUD: Once again, another stronger than expected Yuan fix by the PBoC has helped stabilise markets with the Aussie the notable outperformer. Alongside this, better than expected Chinese trade data has also underpinned the currency, which hovers around intra-day highs against the greenback.
- Chinese Trade balance $45bln vs. Exp. $40bln.
EUR: Renewed tensions with Italy’s ruling coalition has taken the recent shine off the Euro. Italian 10yr BTP yields have jumped over 14bps with the Bund-BTP spread wider by 10bps as risks are rising for a potential snap election in Italy. Alongside this, given the tensions, the League party has stated that the only alternative to the current government is new elections. Latest opinion polling in Italy: League party (38%), PD (22%), 5 Star Party (17%).
However, at the time of writing the Euro has made a sharp retracement from its earlier losses following reports that Germany could make a U-turn on its fiscal stance by potentially issuing new debt to finance a climate protection package. Subsequently, EURGBP has continued to edge higher, hitting its highest level since August 2017
Source: DailyFX, Thomson Reuters
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--- Written by Justin McQueen, Market Analyst
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