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US Open Preview – Italian politics push euro to 10-month low versus the greenback; US consumer confidence due
May 29, 2018 11:26 amVideo
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Here are the latest developments in global markets:
Day ahead: US consumer confidence on the horizon; European politics and other geopolitical developments eyed
Tuesday’s calendar is light data-wise, featuring the release of consumer confidence data out of the US. Perhaps most market sensitive during today’s trading – not just for currency, but also equity and bond markets – will be any updates on the Italian political situation, as well as other developments on the geopolitical front.
The CaseShiller indices gauging US housing prices for March will be made public at 1300 GMT, while the day’s most important release, namely the Conference Board’s consumer confidence index, is slated for release at 1400 GMT. The relevant index is anticipated to decline to 128.0 in May, from April’s 128.7.
Italian President Sergio Mattarella’s decision to veto the 5-Star Movement and League’s nominee for the position of economy minister – on the grounds of him being a critic of the euro currency – added a new twist to the Italian political “saga”. The two anti-establishment parties, which only a few days ago appeared within breathing distance of forming a government, are now preparing for fresh elections. The two have been gaining momentum lately and new elections may see them come out even stronger, especially in light of Mattarella being viewed in the public’s eyes as resisting the popular will. The euro, which hit fresh multi-month lows versus the greenback and the yen earlier on Tuesday, is expected to be sensitive to updates on the issue.
While not gaining much attention at the moment but also euro-related, Rajoy’s minority government in Spain appears fragile after recent corruption allegations, and should it collapse it is likely to be perceived as another euro-negative factor, at least in the short-term. More updates on the issue are expected as the week unfolds; Rajoy will face a confidence vote on Friday.
In geopolitics, the US-North Korea summit may be revived, with the parties involved seemingly making efforts for the Trump-Kim meeting to take place around mid-June in Singapore. In this respect, it is interesting that European political uncertainty appears to overshadow, at least at the moment, any positive developments relating to a more constructive US-North Korean relationship in the future.
Meanwhile, the stage is set for more trade talks between the US and China in the days to come. US Commerce Secretary Wilbur Ross who will be meeting EU trade chief Cecilia Malmstrom on Wednesday, will be travelling to Beijing on Saturday for more trade talks. Also notable is that exemptions to US steel and aluminum tariffs are – unless extended – set to expire on June 1.
European Central Bank board member Sabine Lautenschlager will be speaking about monetary policy in Frankfurt, which is hosting a Finance Summit, at 1530 GMT.
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