Euro Weakens on Italian Politics

The euro has softened on heightened political uncertainty. Italian politics will remain in focus today.

Previous Day's Market Highlights

Sterling-euro continued to trade in a tight range around 1.14. The dollar regained the upper hand to test year-to-date lows against both the pound and the euro, meeting some resistance around 1.3305 against the pound but breaking through to a new low against the euro. Heightened political risk and softer economic data have cast doubts on the timing of ECB policy normalisation, putting pressure on the euro. Sterling came under pressure last week on disappointing data and renewed Brexit negotiation concerns.
 
Developments in Italian politics drove the euro lower heading into Monday’s session. After initially strengthening on the president’s rejection of Eurosceptic Paolo Savona as finance minister, the single currency weakened on concerns that the heightened political uncertainty could lead to new elections, possibly resulting in the populist parties’ achieving a larger majority. Conte subsequently gave up his mandate to try to form a government.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1460 1.1478 1.1302 1.53%
GBP/USD 1.3286 1.3773 1.3280 3.58%
EUR/USD 1.1595 1.2081 1.1586 4.10%
GBP/AUD 1.7631 1.8290 1.7584 3.86%
GBP/NZD 1.9169 1.9702 1.9136 2.87%
GBP/CAD 1.7252 1.7675 1.7122 3.13%

Today's Market Highlights

Euro-dollar fell below 1.16 this morning and sterling-dollar below 1.33 to their lowest levels since November, while sterling-euro continues to trade above 1.14.

The calendar gets to a quiet start after yesterday’s bank holiday in the UK and the US. A pick-up in the S&P/Case-Shiller Home Price Indices could offer the dollar some support this afternoon but may overall have a relatively limited market impact. ECB Member Mersch will give the keynote speech on “The Continental Perspective” at the Frankfurt Finance Summit. ECB Member Lautenschläger speaks later at the Colloquium “Monetary policy – End of (hi) story?” organised by the Center for Financial Studies.
 
Notable releases this week include the second estimate of Q1 US GDP, the Bank of Canada’s interest rate decision, preliminary May Eurozone CPI, US Personal Consumption Expenditures, UK Manufacturing PMI, and the May US jobs report.

Today's Economic Calendar

Time Currency Release Consensus Previous
11:30 EUR ECB's Mersch Speaks
14:00 USD S&P/Case-Shiller Home Price Indices YoY (Mar) 7.0% 6.8%
17:30 EUR ECB's Lautenschlager Speaks
22:00 NZD RBNZ Financial Stability Report
23:45 NZD Building Permits s.a. MoM (Apr) 14.7%
02:10 NZD RBNZ Governor Orr Speaks
02:30 AUD Building Permits MoM (Apr) -3.0% 2.6%

Caxton