European stocks slid to their lowest levels in 6 months yesterday, as concerns surrounding the much publicised Italian Budget, along with global trade war concerns are making European stock markets less attractive places for investors to hold funds.
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The disagreement between Italian and EU leaders is one of the main drivers of the euro's value at the moment, and many are concerned that the issues faced by the stock market could spill over into the euro's value and we could see EUR exchange rates drop significantly lower.
Investors in Italy have been unnerved after just last week the Coalition Government in Italy set a deficit target of 2.4% of expected economic output in 2019. This is triple the original spending plan, and it’s spooked the markets despite reassuring words from Economy Minister Giovanni Tria just yesterday.
Deputy Prime Minister Matteo Salvini, who appears to be getting ever more popular reiterated yesterday that the Government will not backtrack on its expansionary budget plans and he said he believes it will ‘create jobs and attract investment’.
Those following the euro's value should pay close attention to this topic as Italy is one of the most important members of the EU, and it’s so far refused to go down the cooperative route that Greece did, when faced with increasing debts.
Apart from the key update today from the EU covering their Brexit offer to Theresa May, there will also be some key speeches regarding the European Central Bank's (ECB) monetary policy. ECB member Yves Mersch will be speaking today at 09:00am, and then tomorrow at 12:30pm there will be an ECB Monetary Policy Meeting Accounts update. Expect references to monetary policy from the Central Bank to potentially result in movement for EUR exchange rates and bear in mind the asset purchasing program is expected to end at the end of this year.
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