With few major data points or ground-breaking news to focus on, Sterling, the Euro, Swiss Franc and antipodean currencies have traded in narrow ranges in the past 24 hours. However, with most emerging market currencies losing ground – the volatile Turkish Lira is down nearly 3% – the US Dollar has appreciated to its highest level since March 2017 in trade-weighted terms
Sterling showed little reaction to the release of weak data from the Confederation of British Industry data. Its index of industrial orders fell to a two-year low of -6 and the CBI warned that Brexit uncertainty was weighing on British industry. But with little new news on the Brexit front Sterling has been relatively stable against the Euro and Dollar at respectively 1.133 and just below 1.30.
Similarly, while European equities are down to their lowest in almost two years the Euro has treaded water as markets await the European Commission’s verdict on the Italian government’s proposed budget for 2019. The government’s planned deficit target of 2.4% of GDP does not sit well with the Commission which has threatened to ask for changes to the budget parameters. But Mario Centeno, the head of the Eurogroup of eurozone finance ministers, said yesterday he was confident an agreement could be reached and this has eased what is ultimately a minor crisis by European standards.
