The euro steadied at $1.1680 as recovery was capped by European Central Bank President Christine Lagarde’s remarks. She stressed that the external value of the single currency has an impact on inflation and that policymakers will monitor currency movements signalling more intervention further down the road. As Europe grapples with a surge in new coronavirus infections, traders will be looking out for euro zone consumer confidence and industrial sentiment data for September for signs of any impact on the region’s economic recovery. European stock markets opened lower as a rebound in the previous session faded, with investors remaining cautious ahead of the first US presidential debate.
The British pound extended its overnight gains on optimism about a Brexit trade deal as the European Union and Britain kicked off a decisive week of talks. Sterling edged 0.18% higher, touching $1.2930 overnight and then reversing to $1.2867. Against the euro, sterling changed hands at 90.70 pence. Both the EU and Britain said a post-Brexit agreement was still some way off, but European Commission chief Ursula von der Leyen said a deal was still possible. The pound was boosted overnight as Bank of England Deputy Governor Dave Ramsden said he thought the floor for the central bank’s key interest rate was 0.1% quelling for now negative rates talk.
The risk-sensitive Australian dollar gained moderately as economists pushed back expectations for a rate cut by the Reserve Bank of Australia to November from next week, with support also coming from the broad rise in risk appetite. The Aussie has bounced off from its two-month low reached last week braking through strong support levels before recouping some of the losses to change hands at $0.7090.
The Spanish government is due to approve an extension to Jan.31 of the furlough scheme that supports hundreds of thousands of workers through the country’s worst recession on record. The government has reached an agreement with labour unions to extend the ERTE scheme, as furloughs are known in Spain, but still lacks the support of representatives of businesses. Millions of workers in Spain have benefited from the scheme since mid-March when authorities imposed one of Europe’s strictest lockdown to curb the novel coronavirus epidemic. Spanish EU-harmonised consumer prices fell by 0.6% year-on-year in September while furlough August figures showed 800,000 people were still getting benefits.
