Euro Stabilizes Mildly After Two Losing Sessions
The single currency has slightly stabilized today, after posting considerable losses in two straight sessions. The EUR/USD pair is trading at 1.1447, having lost another 0.04% on the day. The euro is trading at the lowest level since October 9 after the European Commission announced that the Italian budget project for 2019 seriously violates the rules of the budget of the European Union. Yesterday, the euro has lost 0.4% versus USD.
Italy’s draft budget, which boosts public spending and cuts taxes, would raise the country’s deficit, which breaches EU rules. The European Commission told Italy that the budget was not acceptable, increasing tension between Rome and Brussels. Italy’s debt stands at an astounding 132% of GDP, and there is a real risk that the country’s financial woes could destabilize the entire Eurozone.
The gap between the 10-year spread of bond yields in Italy and Germany reached its highest level in five and a half years after the statement of the European Commission. The Italian 10-year benchmark bond rose to 3.7410% after finishing Thursday at 3.673%.
The Eurozone current account surplus rose to EUR 24 billion in August from EUR 19 billion in July. A year ago, the surplus was EUR 39 billion. The visible trade surplus increased to EUR 22 billion from EUR 19 billion in the previous month, while the surplus in services trade decreased to EUR 9 billion from EUR 10 billion.