(02 JULY 2019)DAILY MARKET BRIEF 1:EUR optimism subdued amid trade, impasse on EU executive positions

Over a month has passed since European Parliament successors have been elected while newly elected 28 national leaders from Europe Commission, which already gathered three times this year to elect their President, could not come up with a final decision so far, an unusual case which confirms that EU Parliament is set for further deadlocks along the way. Four additional functions including ECB and EU Parliament presidents, head of European Council and top EU diplomats positions remain. Meanwhile, the US administration appears willing to pressure the EU by imposing tariffs on EU products, which would target a total of up to $25 billion from current list initiated in April amid continued disagreement on aerospace government funding. On a side note, Italian government appears willing to comply with EU Commission 2.04% GDP deficit target in order to avoid a multi-billion fine from the EU. An assessment by the Commission in order to decide whether disciplinary action should be implemented should take place this week.

Recent headlines should therefore turn negative for the single currency. We expect EUR/USD to head along 1.1275 short-term.