This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Political parties in Portugal today begin talks to put in place a ‘national salvation pact’ which was called for by President Anibal Cavaco Silva last week. Uncertainty in the country has pushed up the cost of borrowing for the government to above the 7% level. The country received a bailout from the Troika over two years ago and had hoped to exit the bailout scheme this year, but that is looking unlikely given the sudden spike in their bond yields. This news spooked traders and the euro is trading at $1.3022, down 0.3% against the dollar on the day.
We are expecting a raft of economic data from the US later on; at 1.30pm (London time) retail sales and empire state manufacturing will be released, followed by business inventories at 3pm. If these economic updates are positive we could see the euro drop below the $1.3 mark, as it could lead the Federal Reserve to look to taper their stimulus package towards the end of the year.