Brexit remains in focus also today: extended discussions around the Brexit strategy are likely to dominate today’s UK cabinet meeting after negotiations with the EU broke down again over the weekend. Markets will keep an eye on any indication that signal a softening stance of the DUP party on the Irish border issue ahead of the EU’s Brexit working dinner tomorrow. Furthermore, risk sentiment in global markets remains shaky, not least due to rising geopolitical tensions around Saudi Arabia and Italian risks simmering in the background.
The Italian government will start holding first discussions on the budget law today after having submitted its budget proposal to the EU yesterday evening. Markets look forward to an eventful EUR calendar, with the UK labour market report for August due today. We expect annual earnings growth to stay around the 3% mark, with the unemployment rate remaining stable at 4.0%. German ZEW expectations for October will give a first indication of the economic momentum in Q4 and we will watch out for whether the recent recovery in the forward-looking expectations component continues in October, despite lingering headwinds from the external and political side. Later in the day, the US JOLTS job openings, industrial production and NAHB Housing Market Index will offer some fresh impetus to the US dollar trades. The Kiwi trades will await the release of New Zealand´s fortnightly dairy auction results, which will be reported around 1400 GMT.