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EU in limbo in more ways than one

Published: Tuesday 09 October 2018

  • Mixed signals in Asia Pacific markets
  • Australian business confidence rises
  • Brexit’s back, back again…
  • EU in limbo in more ways than one
  • What to watch out for today

​​By Jonathan Russell

Mixed signals in Asia Pacific markets
The financial markets are mixed in Asia today as we seem to have seen peak risk aversion – for now. In the currency markets, the Australian Dollar is trading as the strongest currency for today so far, having been lifted by stabilising Chinese stocks, as well as improvement in Australian business confidence.

Australian business confidence rises
The Australian National Australia Bank (NAB) Business Confidence Index, which rates business conditions in Australia to seek signs of future economic moves, such as increasing employment and rising investment. A rating over zero means business conditions are improving: the business confidence index figure rose to six in September, up from five and beating the forecast of five. Business conditions rose to 15, up from 14 and also surpassing expectations of nine. Overall, conditions seem to be improving across all industries, and Australia is also seeing growth in Gross Domestic Product (GDP), income and inflation. A weaker Australian Dollar helps support the heavily trade-reliant Aussie economy through cheaper exports and, although interest rates have remained at record lows for a considerable time now, the pick-up in inflation and other areas could all be signs that the Reserve Bank of Australia (RBA) will increase rates soon.

Brexit’s back, back again…
Brexit is back on the agenda again today, as Representatives of Northern Ireland's two main unionist parties meet chief EU negotiator, Michel Barnier, today. The Democratic Unionist Party and Ulster Unionists are due to hold separate meetings in Brussels. There was optimism over the weekend as EU officials talked about the possibility that a Brexit deal could be reached by the end of the year. However, the Irish prime minister said there is still "a fair bit of work to be done".

UK politician, Steve Baker, believes that the UK should not be afraid to move ahead with No Deal. He says that the UK “will not accept a half in half out Brexit” and states that at least 40 of his colleagues would reiterate this. Baker says that they would vote UK Prime Minister Theresa May down if such a deal was put forward.

EU in limbo in more ways than one
And there’s more political limbo for Europe, as the current impasse between Italy's government and the EU over the country's budget has led to some people comparing the situation to the Greek debt crisis, with Italy having the potential to be "much scarier" than Greece, according to market commentators, given Italy’s status as the Eurozone’s third-largest economy and much deeper trade links with the rest of EU than Greece.

Also today, the German trade balance figures were released, again disappointing markets with a fall in imports and further evidence of slowing manufacturing growth in the EU’s largest economy.

What to watch out for today
Overall, the economic calendar is pretty light today, although across the Pond, Canada will release housing starts data, following the Thanksgiving break. 

Markets will be watching the continuing Brexit negotiations closely, along with Federal Reserve speeches in the UK and Business Optimism results for September.

Things you don't want to hear your Doctor saying
• I'll just pop on this bio-hazard suit and I'll be right with you
• Just put your clothes on the chair over there...right next to mine.
• Woah...what the....!
• I'm just going to get my colleagues; they could do with a good laugh.
• I don't think it is supposed to be purple but I'll get a second opinion.
• They usually come in twos but I can't see the other one. 
• I'm gonna need a bigger bandage. 
• You know how doctors always say 'you won't feel a thing', well on this occasion...
• I really don't think anyone has cream for that
• Take two of these five times a day and never EVER call me again
For more information, infographics and the latest currency insights, visit www.halofinancial.com/news