Monday sees a very thin start to the week, to a busy second-half, in terms of the macro events, as the EUR calendar has only the German Bundesbank (Buba) monthly economic report. The NA session also remains a thin-showing, with the US Chicago Fed National Activity Index due at 12:30 GMT. The Italian budget-related headlines and Brexit news will continue to drive the sentiment around the forex markets.
Italy has until Monday to explain to the Commission its breach of rules and faces the rejection of its budget, which may eventually lead to sanctions. The Italian government expects the European Commission to decide for the first time ever on Tuesday to ask a member state to revise its draft budget, a government source said on Sunday. Italy is expected to be on the agenda when the European Central Bank meets on Thursday. The bank is considered certain to keep policy on hold and likely put off discussion about its reinvestment policy until December.
The Dollar recovered from an early dip on the Yen as the USD/JPY pair moved higher towards 112.70 levels but lacked further momentum amid broad-based US dollar softness. Both the EUR and GBP consolidated last week´s bounce, as markets look forward to fresh political headlines that will drive this week´s price-action. The Euro started the week steady at 1.1511 against the dollar having bounced from Friday’s low of 1.1432, and the Pound idled at 1.3063 against the Dollar as the market waited for more developments on Brexit.
In equity markets, this week is the peak period of the U.S. earnings season and companies reporting include Amazon, Alphabet, Microsoft and Caterpillar.
In commodity markets, Gold held a bit higher at $1,226.76 per troy ounce but expected to be impacted by geopolitical tensions. Crude Oil prices were stable on Monday, supported by supply concerns ahead of the start of U.S. sanctions against Iran’s crude exports, but held back by rising drilling activity in the United States. Brent crude is trading at $79.58 a barrel, while U.S. Crude rose to $69.50 as of writing.