Italy’s continued budget row with Brussels continues to weigh heavily on the euro, as it hit its lowest mark against the dollar for six weeks. Rome is refusing to back down over plans to target a deficit target of 2.4% of GDP. The markets are concerned that there could yet be another wave in the prolonged eurozone crisis and although the Italian government is not currently planning to leave the euro, developments (or the lack of) are certainly concerning.
There were no major economic data releases from the eurozone, but even if there had been, they would likely have been overshadowed by the Italian budget row. Unlike yesterday, today is busy, with composite and services PMI for Germany and the eurozone on the schedule. We will also see retail sales for the eurozone in August, which are expected to bounce back from last month’s disappointing figures. It will be interesting to see whether the euro can arrest its recent slump against the dollar.