Euro area industrial production contracted in the last quarters. The German auto sector led the weakness, as Euro area purchasing-manager-indices moved sharply lower. Italy’s growth seems to have stalled: an indirect effect of Rome’s anti-establishment government fiscal disagreement with Brussels has been a restriction of credit in Italy. EUR/USD failed to break the midterm downtrend and is now heading toward 1.1143 support. We little strength in European equities due to the weaker Euro. In the UK, the resignation of former transport minister Jo Johnson has highlighted the obstacles faced by Prime Minister May. A Brexit agreement that Brussels, her government and the House of Commons is becoming increasingly difficult to visualize. GBP/USD dropped after failing to clear 1.3140 (16 month low): shorts are eyeing minor support at 1.2785.
By Peter Rosenstreich