On Tuesday, the Single European Currency put the Italian concerns firmly behind it to reach a best level around USD1.2410; the first time it had been back a 1.24 big figure in two weeks. On Wednesday, the EUR extended its gains to a high just under 1.2440 at lunchtime in Europe before then slipping back to the high 1.23’s in the New York afternoon session.
In crafting its response to the US President, The Times reports that, “Cecilia Malmström, the European Union commissioner for trade, warned Mr Trump that tariffs on EU steel and aluminium would prompt retaliation. The EU has identified an array of US products for potential countermeasure tariffs, including orange juice from the politically influential swing state of Florida; bourbon from Kentucky, the home state of Mitch McConnell, the senior Republican in the Senate; and Harley Davidson motorcycles, which are headquartered in Wisconsin, the home of Paul Ryan, the Republican Speaker of the House.” Tariffs on EU steel would “put thousands of European jobs in jeopardy, and it has to be met by a firm and proportionate response,” said Ms Malmström.
There is an ECB Council Meeting today with a Press Conference as usual at 1.30pm London time. Though all the activity data on the Eurozone economy are positive and surveys of business and consumer confidence remain close to multi-year highs, inflation has actually slipped back over the last couple of months. ECB President Draghi will likely use this as a reason not to change the forward guidance around the ending of QE and stick to current language about no increase in interest rates until well past the end of the programme. New staff economic projections will also be released. For this morning, the EU opens in London in the low-USD1.24’s with GBP/EUR at 1.12.