The Euro extended its early week gains, opening this morning at 1.1490 despite fresh concerns from Italy. The catalyst for the shift upwards was attributable mostly to USD weakness after US President Trump and FOMC Member Bostic both commented on the economy. Nevertheless, the Euro finds itself at its highest point in over a week.
The Euro traded within a tight 30-pip range for much of Monday with little to drive momentum on the economic calendar. However, the market did start to heat up after the Italians took the spotlight. After the tragic Genova bridge collapse the Italian government wants to spend €80 billion on infrastructure. The move however would breach EU budgetary rules, potentially outlining a conflict with the wider union. The Euro shed some of its earlier gains and was whittled lower against the Greenback as investors took the news from Italy poorly.
Fortunes shifted decidedly however after President Trump and the FOMC’s Bostic commented on the economy. President Trump began the proceedings, complaining again about the Fed’s monetary policy decisions. The highlight was his remarks that he expected Powell to be “a cheap-money Fed Chairman” and that he is “…not thrilled with his raising of interest rates”. Bostic however, mentioned that the economy did not need further stimulus but there are concerns over the flattening yield curve. The market interpreted these comments as mostly dovish and the USD fell across the board, driving its counterparts higher, including the Euro.
Moving forward into the week, the domestic economic calendar remains light with the focus squarely placed on on-going US-China trade talks that is slated to start today.