The overall economic index for the eurozone fell for the fourth time in a row yesterday morning to hit four-year lows. This downturn in momentum since the summer may begin to worry investors, with a portion of the markets likely to question the block’s stability, should the ECB follow through on its commitment to winding down its financial stimulus.

Currency Pair% Change in 1 monthDifference on £200,000
GBPEUR3.3%€7,800
Sentix investor confidence down

It will be interesting to see if the European Central Bank nod to this on Thursday afternoon as they release their Interest rate decision.

I find it hard to see how president of the ECB Mario Draghi will put a positive swing on the meeting, particularly with business confidence readings from the Manufacturing and Services sectors released shortly after, both looking likely to follow suit to the gloomy outlook offered by Sentix report yesterday.

Because of this, depending on how the market’s interpret Brexit developments over the next couple of days, we could potentially be looking at a slightly weakened euro during Thursday and Friday’s trading.

Macron’s public appeal

The French president addressed the public yesterday evening after a long couple of weeks of protesting which have escalated into various violent outbreaks across the country.

Over the weekend, more than 1,700 people were arrested with over 250 injured in Paris alone as 136k “gilets jaunes” marched the streets.

Macron promised a rise in minimum wage (+100€pm) and tax cuts for the pensioners in a bid to soften the pinch felt by the public but importantly made it clear there would be no back tracking on his Government’s ecotaxe. The measures should stand to cost the country approximately €8 billion which has already drawn question marks over Macron’s commitment to keeping the country’s debt under the EU’s 3% target. “So much for leading by example” have been some of the jibes from Italy in particular.

Protest leaders have already mocked the president for his “handouts”  and confirmed that more marches are scheduled for the end of the week.

The fact that these protests against the rise in living costs have stretched out to major neighbouring cities in Spain and Belgium just goes to show how much traction they have been gaining and maybe reflect a general feeling of resentment across the block.

It will be interesting to see how these outbreaks continue to scale over the coming months and potentially begin to weigh on the euro.

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