The Euro: Two negative factors against growth
At the end of last week almost all the major currencies showed a decline. The largest decline against the greenback showed the British pound. His fall was 1.81%. The new Zealand dollar fell by 1.08%, Euro — on 0,95%, Australian dollar by 0.45%, the Swiss franc by 0.06%, the canadian dollar by 0.03%. The Japanese yen has appreciated by 0.57%.
The Euro dropped to 1,1336. By the close of the day, buyers played all the losses, renewing the European maximum. Pressure on the dollar had a American statistics and the decline in us yields. Falling stock markets renewed demand for the yen and us government bonds. A rise in bond prices has lowered the yield on them. “Eurobulls” have met resistance at 1,1421.
At the end of the day, the S&P 500 down 1.19%, the DJIA was 1.73%, NASDAQ — on 2,06%. Sale of shares intensified after the publication of quarterly reports of large companies such as Amazon and Google.
Price restored to the specified level through the fall to 1,1336. The uncertainty around Italy and Brexit will keep the pair Euro/dollar from the strong growth. Until the situation is resolved with the draft budget of Italy in 2019, the Euro is unlikely to climb. The possible strengthening of the Euro against the background of General weakening of the U.S. currency.
At the moment I see two negative factors for the Euro:
1. Standard & Poor’s (S&P) downgraded the rating of Italy to “BBB-” to “negative.”
2. Deputy Prime Minister of Italy Matteo Salvini said that the government will not change anything in the project.
He also assured that no Italian Bank will not be bankrupt. You can talk all you want, but it is unlikely it would listen to investors. The Italians do not want to repeat the fate of the Greeks and the withdrawal of capital from the country, fearing that the fall of the Euro will end the banking crisis. The franc and yen for them are protective assets.
If the media leaked information that the Italian banks holding government bonds of Italy, there were problems due to the growing profitability for them, the Euro will weaken on all fronts. The force of the fall will depend on how and in what form the media will present this information.
At 12:30 GMT United Kingdom announced a change in the volume of net loans to individuals, the number of approved applications for mortgage loans and consumer credit for September.
At 14:00 GMT UK will release retail sales according to the Confederation of British industry in October.
At 15:30 GMT the U.S. will release the base index of personal consumption expenditures for September and will announce the change in personal income and spending for September.