EU And France At Odds Over Budget
The euro was steady above $1.26 on Tuesday morning despite more worries about the eurozone economy.
The common currency traded at $1.2651 at 7:00 GMT as investors watched a battle between the EU and France unfold over budget concerns.
The Wall Street Journal reported that French Prime Minister Manuel Valls defended Paris’ decision not to make any more budget cuts, saying that further spending cuts would stunt the nation’s already fragile growth.
Brussels is likely to reject France’s 2015 budget, as it does not meet the region’s standards as far as spending cuts. The region’s policymakers opted to cut just 0.2 percent of GDP rather than the 0.8 percent that was originally agreed to with the EU, something that is likely to spark a controversy across the eurozone.
The eurozone has been struggling with weak growth and falling inflation over the past year despite the European Central Bank’s efforts to stimulate the economy.
Many are betting that the bank will roll out a quantitative easing program in the near term, but several eurozone policymakers are hesitant, saying that nations like France need to implement structural reforms before more liquidity can be injected into the market.
The currency was also weighed down by a survey out on Monday showing that sentiment had fallen for the third straight month in October. Eurozone investors’ opinions about the future had digressed considerably from September with the survey’s reading coming in at -13.7 in October, down from -9.8 in the previous month.
The figures suggest that the bloc is headed for a technical recession, two consecutive quarters of contraction.
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