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The euro was king of pips during the Asian session on speculations that the Italian government would bend its budget plans.

Meanwhile, the Aussie and Kiwi took hits as traders flocked to lower-yielding bets.

  • China’s markets out on National Day holiday
  • AU AIG services index inches up from 52.2 to 52.5 in September
  • NZ ANZ commodity prices slips by 1.8% vs. 1.1% decline in September
  • U.K. BRC shop price index (y/y) up by 0.2% vs. -1.1% previous
  • AU building approvals plunges by 9.4% vs. 1.0% expected, -4.6% previous

Major Events/Reports:

Italy to bow to EU pressure?

A few hours ago, Corriere della Sera cited a Cabinet meeting and shared that Italy’s populist, anti-establishment government might bow down to the EU’s budget restrictions after all.

The newspaper detailed that the government will stick to its 2.4% budget in 2019 but would reduce its target deficit to 2.2% and then 2.0% in the next two years.

The report was especially welcome for investors who had worried over seemingly unbending statements from key officials like Claudio Borghi, Giuseppe Conte, and Luigi Di Maio in the last couple of trading sessions.

Mixed market performance

U.S. equities may have logged another positive day yesterday, but that didn’t stop Asian session players from taking a chill pill.

Japanese automakers were hit, for example, by a sharp drop in the U.S. new car sales last month. Meanwhile, other traders took the opportunity to take profits from the bullish run in the past couple of days.

  • Nikkei is down by 0.79% to 24,077.8
  • A SX 200 is up by 0.14% to 6,139.5
  • Hang Seng is down by 0.52% to 26,985.8

Commodity prices were a little more bullish, with the safe-haven gold taking advantage of some risk aversion while crude oil prices continued to inch higher ahead of Iran’s sanctions scheduled in November.

  • Gold is up by 0.34% to $1,206.87 per troy ounce
  • Brent crude oil is up by 0.26% to $84.81 per barrel
  • U.S. WTI is up by 0.27% to $75.20 per barrel

Major Market Mover(s):

EUR

The common currency clobbered its major counterparts on speculations that the Italian government would exert more effort in meeting the EU’s budget deficit standards.

EUR/USD is up by 30 pips (+0.26%) to 1.1577; EUR/JPY is up by 37 pips (+0.28%) to 131.61; EUR/GBP is up by 15 pips (+0.17%) to .8911; EUR/CHF is up by 29 pips (+0.25%) to 1.1391, and EUR/CAD is up by 36 pips (+0.24%) to 1.4844.

AUD

A drop in Australia’s building approvals and a bit of risk aversion in the markets weighed on the high-yielding Aussie across the board.

AUD/USD is down by 14 pips (-0.19%) to .7174; AUD/JPY is down by 13 pips (-0.15%) to 81.56; AUD/CHF is down by 14 pips (-0.20%) to .7058; EUR/AUD is up by 75 pips (+0.47%) to 1.6137, and GBP/AUD is up by 58 pips (+0.32%) to 1.8109.

NZD

Much like the Aussie, the high-yielding Kiwi was weighed down by traders rushing to lower-yielding bets. It also doesn’t help that a commodity prices report printed earlier is looking bearish in the months ahead.

NZD/USD is down by 18 pips (-0.27%) to .6575; NZD/JPY is down by 18 pips (-0.24%) to 74.74; NZD/CAD is down by 25 pips (-0.30%) to .8430; GBP/NZD is up by 80 pips (+0.40%) to 1.9761, and NZD/CHF is down by 18 pips (-0.27%) to .6469.

Watch Out For:

  • Germany’s banks out on German Unity Day holiday
  • 7:15 am GMT: Spain’s services PMI (52.9 expected, 52.7 previous)
  • 7:50 am GMT: No changes expected from France’s 54.3 services PMI
  • 7:55 am GMT: Germany’s final services PMI expected to remain at 56.5
  • 8:00 am GMT: Euro Zone’s final services PMI estimated to remain unchanged at 54.7
  • 8:30 am GMT: U.K.’s services PMI (54.0 expected, 54.3 previous)
  • 9:00 am GMT: Euro Zone retail sales (0.2% expected, -0.2% previous)