Euro rises as Italy's Budget Debate Comes to an End


The euro appreciated against major currencies, supported by the news that Italy and the European Union Commission reached an agreement concerning Italy's 2019 budget. An Italian government source reported that the EU Commission accepted the 2019 budget deficit of 2.04%. The Italian bond market cheered the good news, and the Italian 10-year yields dropped to their lowest since September. The EURUSD is trading near the 50-day simple moving average at $1.1400, and the EURCAD rose to 1.5355, the highest since September.


The dollar index which measures the greenback against a basket of major currencies continues on the backfoot for the third consecutive day as investors await the Federal Reserve interest rate decision. The CME FedWatch tool is showing a probability of 71% that the Fed will raise rates by 25 basis points today to 2.25-2.50%. President Trump tweeted for two consecutive days criticizing the Fed's anticipated interest rate hike. Market participants will focus on the press conference of Chairman Powell for clues about the future path of interest rates. The US 10-year yields fell to 2.80%, the lowest since late May. The USDJPY is trading near the 100-day simple moving average at 112.35, and the USDCHF is trading at 0.9920.


Gold remains hovering near the 200-day moving average at $1250 supported by the growing concerns over global growth. Investors are rushing to safety amid expectations of a recession in 2019. Meanwhile, the silver ounce is trading near $14.70, and palladium is tackling a new high at $1260.


Oil prices finished sharply lower for the third consecutive day weighed down by woes of oversupply and signs of a global economic slowdown. Moreover, the American Petroleum Institute reported that the US weekly crude oil stock rose by 3.450 million barrels last week. The West Texas Intermediate crude futures plunged 6.6% to $45.82, the lowest since July 2017, and Brent futures lost 4.6% to $55.99, the lowest since October 2017. The Energy Information Administration will report the official crude inventories later today.

Major Economic Events

GMT Country Event Expectation Previous
9:30 UK CPI (YoY) (Nov) 2.3% 2.4%
9:30 UK CPI (MoM) (Nov) 0.2% 0.1%
13:30 CA Core CPI (MoM) (Nov)   0.4%
13:30 CA Core CPI (YoY) (Nov)   1.6%
15:00 US Existing Home Sales (Nov) 5.20 5.22
15:30 US Crude Oil Inventories -2.437 -1.208
19:00 US Fed Interest Rate Decision 2.5% 2.3%
19:30 US FOMC Press Conference    
21:45 NZ GDP (QoQ) (Q3) 0.6% 1.0%


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