CURRENCIES: Sterling Slides After Weak U.K. Inflation Data; Dollar Traders Await Fed Minutes
October 17 2018 - 2:13PM
Dow Jones News
By Anneken Tappe
Currency markets saw choppy trade Wednesday, as themes driving
major pairs including Brexit and worries about Italy remained
firmly in place.
The U.S. dollar was among the better-developed market
performers, with the ICE U.S. Dollar Index last up 0.4% at 95.384,
counteracting Tuesday's sluggishness. U.S. traders are meanwhile
awaiting the Federal Reserve's latest meeting minutes, which are
due to be released at 2 p.m. Eastern. The U.S. Treasury's report on
foreign exchange practices in which the U.S. could label China a
currency manipulator
(http://www.marketwatch.com/story/heres-how-far-the-us-may-go-in-criticizing-chinas-currency-practices-2018-10-16)
is also looming.
In Brussels, a highly anticipated European Union summit is on
the schedule. Market participants are watching for whether the
talks can clear the way for an expected November meeting to
complete a deal ahead of the U.K.'s departure from the bloc in
March.
Read:What is Brexit and why is it proving so complicated?
(http://www.marketwatch.com/story/what-is-brexit-and-why-is-it-so-complicated-2018-10-17)
The British pound last bought $1.3144, down from $1.3185 late
Tuesday. This weakness was in part due to lower than expected
consumer price data.
In European data, harmonized inflation for the European Union
was unchanged at 2.1% for the year leading up to September, while
U.K. harmonized consumer prices undershot expectations at 2.4%
versus 2.6% expected.
The cooler British print was "dampening any need for Bank of
England action in the immediate future," said Boris Schlossberg,
managing director of FX strategy at BK Asset Management.
Anticipated interest rate increases in 2019 have been lending
some support to analyst's medium term view on the Brexit-battered
British pound.
Read:With 'no-deal' Brexit risk on the rise, analysts see
uncertain path for pound
(http://www.marketwatch.com/story/with-no-deal-brexit-risk-on-the-rise-analysts-see-uncertain-path-for-pound-2018-10-16)
Elsewhere, the Italian budget remains on investors' minds. The
country's 2019 budget proposal which foresees a higher budget
deficit will likely run up against some problems in Brussels.
Italian undersecretary of the regions Stefano Buffagni said the
country, which is the EU's forth largest economy, had to prepare
for a possible downgrade of its credit rating. Investors are
worrying about the financial state of Italy, as the country is
considered to large to be bailed out in the way Greece was.
The euro last fetched $1.1533 from $1.1577 Tuesday.
(END) Dow Jones Newswires
October 17, 2018 13:58 ET (17:58 GMT)
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