- Political troubles weigh on Euro
- UK still to decide on divorce bill sum
- Reserve Bank of Australia plans to keep interest at record low
By Jonathan Russel
Political troubles weigh on Euro
The Euro remains the weakest major currency for the week so far on political uncertainty in Germany. In addition, dovish comments from European Central Bank (ECB) President, Mario Draghi, are also weighing down the common currency.
After meeting with Chancellor Angela Merkel, German President Frank-Walter Steinmeier said, "we are now facing a situation that has never happened before in the history of the Federal Republic of Germany, that is for almost 70 years".
After the coalition talks collapsed, German President Steinmeier rejected the idea of new elections, but urged political parties to "pause and reconsider their positions".
ECB President Draghi said that time is still needed for the improvements in the labour market to "translate" into "more dynamic wage growth. He also emphasised that “monetary stimulus is still necessary to secure a sustained return of inflation".
UK still to decide on divorce bill sum
The BBC reported that after discussions in a cabinet meeting, there is broad agreement among ministers in the UK for the government to raise the divorce bill to offer to the European Union. However, there was no substantial discussion on the amounts to be raised. There were reports that the UK would double the £20 billion offered to £40 billion, but Downing Street has rubbished such rumours.
European Council President, Donald Tusk, has set a deadline of completing sufficient progress before the December summit on 14th and 15th, before moving on to trade agreements.
EU chief negotiator Michael Barnier, has already been clear that the UK has to "settle the accounts accurately" before trade talks begin.
Reserve Bank of Australia plans to keep interest at record low
Overnight, the Reserve Bank of Australia (RBA) signalled in the November meeting minutes that interest rates will remain at their current historic level, maybe longer than originally expected. In particular, the central bank warned of "considerable uncertainty" over wage growth.
Still to come on Tuesday is a speech from RBA Governor Philip Lowe in Sydney.
Time to reshape US monetary policy?
The current Federal Reserve Chair, Janet Yellen, announced yesterday that she will step down from the Federal Reserve Board of Governors in February, after her role as Chair ends. There are now four spots altogether in the seven-member board to be filled. This is seen as a golden opportunity for US President Donald Trump to reshape the monetary policy direction of the US.
- Economic data remains light today. Later this week, a key focus will be on:
- The UK Inflation hearing.
- Switzerland’s trade balance data in European session.
- The UK will release public sector net borrowing figures.
- Canada releases wholesale sales data.
- The US will release existing home sales results.