(06 NOVEMBER 2018)DAILY MARKET BRIEF 1:Euro under pressure as Italy’s budget deadline approaches

EUR/USD is currently bouncing off a 1.1312 low (31 October), heading toward 1.1430 short-term. Italy’s deficit budget proposal of two weeks ago has pushed the single currency down against major currencies. Meanwhile, the German Bund spread continues to widen as investors handicap Italy’s bankruptcy risk: at 2.92, its highest in 30 months. If Italy does not fall in line with the European Union’s budget guidelines, it will face fines as high as 0.20% of GDP, pushing the government further into bankruptcy which would weigh on the EUR.

The EU Commission is waiting for an Italian budget resubmission, due for 23 November. But Prime Minister Giuseppe Conte says there is alternative and that no changes will be made. The Commission will rule on all EU-members’ budgets on 21 November.