Euro under political pressure
By Yann Quelenn
The Euro tumbled against the US dollar after market opening, weighed down by political uncertainties. Austria yesterday elected a young conservative Chancellor, Sebastian Kurz, who is an anti-immigration millennial and will likely open up to the far right in order to build a government. Yet it does not seem that the new government will be against the euro. Tensions in Spain and its (still) province Catalonia continue. Madrid is now giving an ultimatum to the Catalans. Companies are moving away from Catalonia; entrepreneurs are moving to bordering areas. We continue to believe that strongest uncertainties are not in centre stage at the moment, but the Greek debt issue has the potential to weigh on the single currency.
Dollar uncertain
By Arnaud Masset
The US dollar experienced another broad-based sell-off last Friday, and then mostly recovered its losses on Monday, as investors are torn between optimism and pessimism.
Commodities currencies benefited the most, as investors discounted a US rate hike. The Euro rose 0.58% to 1.1875 before eroding gains and returning towards 1.1820 as market participants appeared reluctant to load long EUR positions against the backdrop of political uncertainties across the European Union. US September headline inflation came in at 2.2% annually versus 2.3% expected and 1.9% in August, while the core measure, which excludes the most volatile components, held stable at 1.7% versus an expected increase of 1.8%. The solid pick-up in the headline measure is mostly due to a surge in energy prices as motor fuel prices and fuel oil rose 13% and 8.2% over the month. Food prices remained roughly stable.
Investors don’t know where to stand against the backdrop of an uncertain outlook on both side of the Atlantic.