It isn’t too clear what’s the driving force in the forex markets today, except Brexit concerns on Sterling’s weakness. Italy’s budget remains a concern as the coalition government replied to EU insisting to stick with it’s deficit target in 2019. European Commission will discuss the way to handle it in a regular meeting tomorrow. For now, Euro is trading mixed only. New Zealand Dollar and Australian Dollar are the weakest ones next to Sterling, getting no support from strong rebound in Chinese stocks.
On the other hand, US and Canadian Dollar are the strongest ones, followed by the Swiss Franc. It’s also unclear what’s driving the greenback higher. US treasury yields are trading generally lower at the time of writing. Stocks are also weak except NASDAQ. Though, Canadian Dollar could be seen as paring Friday’s steep loss with anticipation of rate hike by BoC later in the week. Swiss Franc’s strength could be explained by the sharp pull back in EUR/CHF as Euro’s rally attempt falters.
In other markets, majors European stock indices reversed after initial rally.
- FTSE closed down -0.04% at 7047.22
- DAX closed down -0.21% at 11529.14
- CAC closed down -0.51% at 5058.77.
- German 10 year yield drops -0.010 to 0.453
- Italian 10 year yield drops -0.1033 at 3.478. This is mainly a reaction to Moody’s downgrade with stable outlook last week. German-Italian yield spread remain at around the alarming 300 level.
