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Risk appetite was the name of the game on Monday morning as positive updates from Italy and the United Kingdom kept traders in a good mood. It also helped that the S&P 500 and Dow are raking in gains.

  • U.S. headline durable goods orders down 1.1% vs. projected 0.5% drop
  • U.S. core durable goods orders post 0.1% uptick vs. estimated 0.4% gain
  • Italian gov’t to spend up to 17 billion EUR to save two regional banks
  • ECB head Draghi: Low rates helped create jobs and reduce inequality

Major Events/Reports

Downbeat U.S. economic data

Uncle Sam’s first batch of reports for the week didn’t look so good as headline and core durable goods orders figures both missed expectations.

The former posted a 1.1% slump, more than twice as much as the estimated 0.5% fall and larger than the earlier 0.8% drop, while the latter printed a meager 0.1% uptick instead of the projected 0.4% gain.

This could be indicative of slowing business momentum as companies usually increase purchase orders of durable goods to prep for higher production activity down the line. However, this didn’t seem to dull the dollar’s shine all that much as a couple of U.S. equity indices managed to end in the green:

  • S&P 500 index is up to 2,436.00 (+0.03%)
  • Nasdaq is down to 5,777.75 (-0.59%) on tech sector woes
  • Dow 30 index is up to 21,409.55 (+0.07%)

Positive sentiment from Europe

The upbeat vibes from the previous trading session carried on for the most part of the day, spurred by the Italian bank deal and the coalition with the DUP in the United Kingdom.

As it turns out, the Italian government will spend as much as 17 billion EUR in order to deal with a couple of failing regional banks, easing fears of systemic risk spreading throughout the country and the euro zone.

To add to that, ECB head Draghi decided to pat himself on the back during his latest testimony, citing that the central bank’s low interest rates have helped create jobs and reduce inequality.

Draghi also dodged questions on when the ECB might start tapering, choosing instead to reiterate that removing stimulus too early could undo the progress they had made. “Interest rates have to be low for growth to recover,” he reminded.

Major Market Mover(s):

JPY

The yen was the biggest loser for the day, dragged lower by risk-taking and stops getting triggered at key technical levels.

AUD/JPY is leading the pack with its climb from 84.10 to 84.84 (+0.72%), CAD/JPY is up from 83.82 to 84.44 (+0.67%), NZD/JPY rose 47 pips to 81.51 (+0.58%), and USD/JPY is up to 111.87 (+0.52%).

CHF

The franc was also down in the dumps as traders in Europe let go of their safe-haven holdings.

AUD/CHF is up to .7375 (+0.50%), CAD/CHF climbed from .7309 to .7338 (+0.44%), GBP/CHF is up to 1.2368 (+0.27%), and USD/CHF is up 29 pips to .9724 (+0.30%).

 

Watch Out For:

  • 11:45 pm GMT: New Zealand trade balance (420M NZD expected, 578M NZD previous)
  • 9:00 am GMT: ECB head Draghi has another testimony