The U.S. Dollar remains steady after the weekend although risk events took place in the form of Italian elections and world reactions to the U.S. decision to place tariffs on steel as well as aluminum.
Higher costs on imports to the U.S. may be countered with barriers to trade from other nations. Thus far, world leaders have shown concern over this move towards protectionism.
Plenty of data will hit this week with Services and Manufacturing coming out later this morning and the European Central Bank meeting Thursday. Political headlines out of Europe where elections just occurred and fights over a Brexit strategy could keep the dollar buoyant against its main counterparts from across the Atlantic.
The Euro swings continue as elections in Italy resulted in a much divided government. Anti-establishment political movements earned plenty of seats with quite diversity across the spectrum. No party coalition reached enough votes in order to govern and compromises will be very difficult to make.
The Five Star Movement, an environmentalist anti-globalization party seems like new wave leftism, while the rightist will demand more protections and a potential EU exit. The established moderates did not gain any seats and see themselves threatened by more populist sentiment. Next few days will be key and the shared currency may be stuck at current low levels.
The Pound lost plenty of ground last week as Brexit worries continue to build up. Prime Minister Theresa May is in trouble as she tries to overcome resistance within her party and a renewed momentum for the Labour Party’s proposals in case of a new election. This week may be crucial in determining if the UK’s current team can abide to any of the demands written by the EU on a draft agreement last week.