Tension Between Draghi and Germany
Cable (GBP/USD) has been fairly range bound of late as it attempts to go over the 1.6000 level. It failed to hold ground yesterday as the latest reports from the UK have not been favourable enough to give the necessary impetus to Sterling. Today, we will see if the Services PMI can aid any sort of push.
There seems to be a possibility of a coup on the horizon for the ECB as central bankers have let it be known that they aren’t overly-enamoured with Mario Draghi’s management style. Draghi mentioning the enlarging of the balance sheet by a trillion euros was something that was not agreed upon and prompted people into longing for the style of his predecessor Jean-Claude Trichet. We could probably put these issues down to reported tensions between German Bundesbank Jens Weidmann and Draghi, and Draghi not acting as Germany’s puppet.
In the US, Barack Obama saw his powers greatly reduced as the Republicans gained the majority in the Senate in mid-term elections. Six years ago, the Democrats had a majority in both the Senate and the House, and now for his remaining two years the Republicans have the majority in both, making it difficult for the Democrats to set a political agenda and forcing Obama to rule by his ability to veto legislation from Congress.
Main data out today is Services PMI from Germany, the Eurozone, UK and the US, retail sales from the Eurozone, non-manufacturing PMI from the US and a fair few speeches from members of the Fed.