The US$ had a mixed session, but has ended the day under some mild downside pressure against all the majors, after earlier making some gains when the Euro was pulled down by ongoing tensions in the EU. Italy remains the centre of attention with German/Italian yield spreads widening due the growing reality that that Italy is not doing to back down on its budget deficit plan despite strong criticism from the EU, and also due to the growing speculation of an Italian credit downgrade. The Euro was also weighed down by weak German trade data and IMF’s growth forecasts downgrade. Sterling was an outperformer today on the back of a report suggesting that the UK and EU have made progress in Brexit talks ahead of the EU Summit at the of October. The report suggested that the UK and EU are close to reaching an agreement on divorce terms, possibly as soon as Monday.
Elsewhere it has been a choppy session with little real direction in either stocks or commodities, although US bond yields are slightly lower, creating a headwind for the dollar today..
Wednesday kicks off with the NZ Electronic Card Retail Sales (Sept), Australian WBC Consumer Confidence (Oct), and a speech during the Asian time zone from the Fed’s Williams. From Europe we get the ECB Non-Monetary Policy Meeting, UK Manufacturing/Industrial Production (August), UK Trade Balance, UK GDP (Aug), while from the US, the PPI (Sept), Wholesale Inventories (Aug) are due, along with speeches from the Fed’s Evans and Bostic.
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