Euro Weakens After Italy Decided to Stick With Its 2019 Budget

Market Reviews

The euro weakens after it was reported, that Italy eventually decided to stick with its 2019 budget plan despite rumors of some adjustments. In a joint statement, Prime Minister Giuseppe Conte and his two deputies Matteo Salvini and Luigi Di Maio, said that “the objectives that have already been fixed are confirmed.” Also, “as far as the on-going discussions with European institutions are concerned, we agreed to wait for the technical analysis of the proposed reforms which have the most important social impact to quantify precisely the cost.”

The British pound did get any sustainable boost from the Brexit deal. The US dollar was lifted by rebound in US stocks and mild recovery in treasury yields. US 10-year yield closed up 0.018 at 3.072 level.

On stock markets, DOW closed up 1.46% at 24640.25. S&P 500 rose 1.55% and NASDAQ added 2.06%. In Asia, Nikkei gained 0.64%, Singapore Strait Times added 0.20%. China Shanghai SSE rose 0.42% but Hong Kong HSI fell 0.009%.

US President Donald Trump threatened to increase tariffs on $200 billion of Chinese goods. In an interview with the Wall Street Journal (WSJ), Trump said he would impose duties on all remaining imports from China if talks with Xi Jinping later this week fail to produce a trade deal. The two leaders are set to meet at the G-20 meeting in Argentina on November 30.

WTO’s World Trade Outlook indicator dropped from 100.3 to 98.6. That’s the lowest level since October 2016. New Zealand trade deficit widened to NZD -1.295M in October, above expectation of NZD -850M. Japan corporate services price index rose 1.3% yoy in October versus expectation of 1.2% yoy.