Risks tilted to the downside for the ECB
Minutes from the ECB's October's meeting showed that a number of board members were concerned that risks were tilted to the downside when it was noted that:
While there was broad agreement that at present the risks to growth could still be considered to be balanced overall, a remark was made that a number of arguments pointed towards risks to the growth outlook tilting to the downside.
And that,
Against this background (Brexit, NAFTA, US China trade war, EU- US trade negotiations), members considered that the uncertainties related to global factors remained prominent, and the risks related to the external environment were assessed to be tilted to the downside.
The end of net purchases is still due to finish in December, but any further indication of a slow down in euro-zone growth and we are likely to see limitations of only one rate hike in 2019. Italy was not referred to directly, but any worsening in the situation is only going to weigh further on the euro. You can read the full minutes here.
Italy's Conte was trying to find a way of appeasing the EU while submitting their 2.4% budget deficit. See that reported here by Adam last night. They are determined to get their budget through and are going to ruffle feathers to do it judging by their determination.
The bottom line for now is that the ECB is holding their course. See ECB's Praet's comments last night which sums it up. Downside risks noted, but staying on autopilot. EURUSD contained by 50EMA on the daily chart for now.
