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Euro Falls on Political Worries

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USD

On Monday, the Greenback fluctuated vs. a basket of major currencies after mixed consumer inflation data clouded the outlook for another rate hike. Despite U.S. consumer prices that rose the most in the past eight months until September with  gasoline prices that soared in the wake of hurricane-related refinery disruptions, the U.S. core inflation unexpectedly remained muted. 

However, Federal Reserve Chair Janet Yellen on Sunday said that the U.S. Federal reserve expects to continue to hike interest rates gradually as solid growth; a strong labor market and a healthy global economy increased prices even as she recognized that inflation has been surprisingly low. 

  • The U.S. dollar index, which measures the greenback’s strength vs. a trade-weighted basket of six major currencies, was up 0.15% at 93.232, backed by the weaker euro.

EUR

The single currency fell against the Greenback as concerns over political uncertainty in the euro area weighed while the U.S. dollar pushed higher despite Friday’s weak U.S. inflation data. Actually, if Catalonia did become independent that would have some great negative impact on the Spanish economy that is why investors have been looking at this very clearly. EURUSD fell as much as 0.28%, to settle at $ 1.1788.

GBP

The Sterling pound rose as much as 0.11% vs. the single currency, to settle at $ 1.3302 amid hopes that the UK could be offered a two-year Brexit transition agreement.

Today, UK Prime Minister Theresa May and Brexit Minister David Davis are heading to Brussels for a private meeting with the European commission chief, where they are expected to make the case for EU leaders to agree to move on negotiations, to pave the way for discussions of the UK’s future relationship with the European union.

JPY

The Greenback rose slightly vs. the JPY and settled at ¥111.84. No reports are due from Japan today.

Gold

Earlier today, Gold prices edged lower on a firmer U.S. dollar and stronger Asian equities, but stayed above the key psychological level of $1,300. The precious metal rose for a sixth straight session on Friday, and was up 0.8% after US President Donald Trump warned he might ultimately end a 2015 nuclear agreement with Tehran and after data showed that the U.S. core inflation unexpectedly remained muted. Gold Futures - Dec 17 (GCZ7), was up 0.21% at $1,307.33.

Oil

Crude prices hit new highs, following reports that Iraqi troops clashed with Kurdish forces near Kirkuk, increasing worries over potential output disruptions in the region. Prices get further support amid concerns that the U.S. will impose new sanctions against Iran following the Trump administration's decision not to certify that Tehran was in compliance with the 2015 nuclear deal. Crude Oil WTI Futures - Nov 17 rose as much as 1.28%, to settle at $ 52.09, while Brent Oil Futures - Dec 17 rose as much as 1.43%, to settle at $ 57.99.

Economic Calendar (all times in GMT)

  • USD U.S. to Sell USD42 Bln 3-Month Bills: (GMT 15:30) – Low
  • USD U.S. to Sell USD36 Bln 6-Month Bills: (GMT 15:30) – Low

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