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TALKING POINTS – YEN, EURO, NZ DOLLAR, US DOLLAR, FED, IMF, ITALY

  • Yen up, Euro and NZ Dollar down as market sentiment sours anew
  • Italian budget woes, gloomy IMF, deepening US/China row in focus
  • US Dollar gains as 10-year Treasury bond yields hit nine-year high

A sour mood looks to be prevailing across financial markets as Asia Pacific bourses hand off the baton to Europe. Most regional stocks declined after the IMF cut its global growth outlook for the first time in two years and Italy re-emerged as a worry for financial markets.

This has offered a familiar lift to the perennially anti-risk Japanese Yen while the Euro is back on the defensive. The sentiment-geared New Zealand Dollar is likewise facing selling pressure, although its Aussie counterpart has managed to hold up for now. That might reflect relative resilience in Chinese shares.

Firming Fed rate hike expectations seem to have added fuel to the risk-off drive, echoing last week’s standout theme across financial markets. The benchmark 10-year Treasury bond yields rose to a nine-year high. Not surprisingly, that offered another upward nudge to the US Dollar.

US/CHINA ROW MAY BE DEEPENING, TRIA TO DEFEND ITALIAN BUDGET

Looking ahead, a relatively quiet day on the economic data docket seems likely to keep broad-based sentiment trends at the forefront. Futures tracking the bellwether S&P 500 stock index are pointing worrying lower, hinting that the anti-risk bias is likely to prevail in the hours ahead.

The bears seem to have ample fodder to work with. US Secretary of State Pompeo flagged “fundamental disagreement” in US relations with China, warning of a deepening row. Meanwhile, Italian Finance Minister Giovanni Tria is due to defend the government’s controversial budget proposal in parliament.

See our US Dollar forecast to learn what will shape price action in the fourth quarter!

ASIA PACIFIC TRADING SESSION

Asia Pacific Economic Calendar

EUROPEAN TRADING SESSION

European Economic Calendar

** All times listed in GMT. See the full economic calendar here.

FX TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter