Italy Goes Anti-Euro, with FOMC Chatter and Trade Talks in Focus

Earlier in the Day:

There were no material stats released through the Asian session this morning to provide direction ahead of what’s a particularly busy week, with the Asian markets looking ahead to tomorrow’s trade talks between the U.S and China and the U.S Trade Representative Office public hearings scheduled to be held mid-week on China trade tariffs.

Following softer inflation figures out of the U.S, the Dollar continued to give up ground through the morning, with the Aussie Dollar up 0.13% to $0.7556 ahead of tomorrow’s RBA meeting minutes and the Yen rising by 0.03% to ¥109.36 against the U.S Dollar.

Bucking the trend was the Kiwi Dollar, down 0.04% to $0.6966 at the time of writing, sentiment towards monetary policy coupled with softer April service sector PMI numbers released early this morning pinning the Kiwi back at the start of the week,.

In the equity markets, it was a risk on session with the Hang Seng and CSI300 leading the way, up 1.28% and 1.12% respectively, while the Nikkei and ASX200 were up 0.37% and by 0.27% at the time of writing, tech stocks finding support following Trump’s lifeline to China tech ZTE Corp.

The lifeline suggests that the U.S administration is eager to strengthen relations with China ahead of tomorrow’s trade talks, which is certainly a positive when considering the possible impact of a U.S – China trade war on the respective economies.

The Day Ahead:

For the EUR, there are no material stats scheduled for release through the day, leaving the markets to focus on what lies ahead for the Eurozone’s 3^rd largest economy following the weekend agreement between Italy’s anti-Euro Five Star and populist League Party to form a coalition after 2-months of deadlock.

While politics will be on the minds of the market, with talk of an Italian exit from the EUR likely to resurface, ECB member commentary through the day could also provide direction should there be any chatter on policy, members Mersch, Lautenschlaeger, Praet and Coeure scheduled to speak through the day.

At the time of writing, the EUR was up 0.15% to $1.1961, the EUR in recovery mode following the softer inflation numbers out of the U.S last week and some positive numbers out of Germany, though things could go wrong this week should Germany’s 1^st quarter GDP numbers come in softer than forecasted.

For the Pound, it’s also a quiet day on the economic calendar, with no material stats scheduled for release ahead of tomorrow’s employment numbers, leaving the Pound in the hands of sentiment towards monetary policy and Brexit through the day.

At the time of writing, the pound was up 0.11% to $1.3557, the upside through the day coming off the back of Dollar weakness rather than a shift in sentiment towards policy and Brexit, neither considered to be positives for the Pound at present.

Across the Pond, with no material stats scheduled for release through the day, FOMC member commentary will provide the Dollar with direction ahead of NAFTA and U.S – China trade talks through the first half of the week, members Mester and Bullard scheduled to speak through the day.

At the time of writing, the Dollar Spot Index was down 0.09% to 92.45, with noise from the Oval Office and FOCM member chatter to provide direction.

Across the border, with no material stats scheduled for release out of Canada, focus will be on NAFTA talks, the deadline extended to this Thursday, with optimism providing the Loonie with support following Friday’s disappointing employment figures that had slowed the Loonie’s recovery.

At the time of writing, the Loonie was up 0.05% to C$1.2788 against the U.S Dollar.