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Markets await ECB policy meeting

Boris Johnson will attempt to come up with a solution to the Irish backstop before trying to force through an election.

Centtrip: German numbers don’t add up

The Euro has started the week on a back foot amid heightened expectations that the European Central Bank (ECB) will deliver new stimulus to bolster a flagging economy in the region.

Market participants are likely to take their cues from the ECB as major central banks introduced measures, including loosening monetary policy, to support a weakening global economy. For example, the People’s Bank of China on Friday, 6 September cut the amount of cash that banks must hold as reserves.

However, it is not set in stone that the ECB will approve new stimulus measures on Thursday, 12 September. It is not clear what the package will look like as a rift has opened between hawks from northern Europe and doves from the south.

Policymakers are rushing to bolster growth as a trade dispute between the US and China has dragged into a second year, increasing the risk of recession.

Meanwhile, German exports rose in July, according to the Federal Statistical Office, suggesting Europe’s largest economy may withstand the headwinds from Brexit uncertainty and the ongoing US-Chinese trade war.

The Euro was little changed at $1.10295 early in Asian trading, after falling 0.1 per cent on Friday. Sterling edged lower as political uncertainty about the UK’s divorce from the European Union by 31 October dented appetite for the currency. The Pound traded at $1.2276, down 0.10 per cent so far on the day.

The Dollar was confined to a narrow range versus the Yen as traders weighed the prospect of US interest rate cuts against their demand for safe-haven assets.

The Yuan weakened following China’s easing and a surprise decline in exports reported on Sunday, 8  September. China’s exports fell in August as shipments to the US slowed sharply, pointing to further weakness in the world’s second-largest economy.

However, in broader financial markets global stimulus hopes have helped lift appetite for riskier assets, such as the Australian and New Zealand Dollars, which hold near recent highs.

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