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US Open Preview – US Treasury yields lead dollar versus yen to 4-month highs
May 17, 2018 11:26 amVideo
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Here are the latest developments in global markets:
Day ahead: Brexit & Italian political developments in the spotlight
As the day goes on, the focus will remain on the political front as upcoming economic releases scheduled for today have relatively limited potential to move the markets. Moves in US treasury yields, which jumped back above the 3.0% psychological level this week, could be eyed as well.
Particularly, the political situation in Italy is likely to keep investors cautious on the euro on concerns that the two populist parties, the anti-establishment Five-Star Movement and the right-wing League, who are said to be near signing a coalition deal, could propose ideas against Eurozone’s budget program. Yesterday, media reports stated that the Eurosceptic parties are planning to ask for a 250 billion euros debt write-off from the ECB. Although the League party, which still wants Italy to leave the euro, dismissed those leaks later on, talks around a potential debt forgiveness continue to weigh on traders’ confidence.
Meanwhile in the UK, news that the British government is preparing to remain in the EU’s custom union beyond 2021 continued to spur buying pressures in the pound market even after the UK Prime Minister said today that the “UK will be leaving the customs union”. Note that the transitional period agreed between the UK and the EU expires in December 2020 and an extension of this deadline must be agreed between the sides before the submission of a final withdrawal bill, probably in October. Moreover, PM May, who is scheduled to meet the President of the European Council Donald Tusk today could seek to clarify her Brexit plans before June’s EU summit.
Developments around the 2015 Iranian nuclear deal could also be under the spotlight after the French President Emannuel Macron said on Thursday that the European Union should protect business with Iran if the US reimposes sanctions on the oil-exporting nation.
As of today’s, data releases, US initial jobless claims, and Philadelphia’s Fed Business index will come into view at 1230 GMT, while at 2330 GMT national CPI readings out of Japan will be under review.
In terms of public appearances, the ECB Vice President Vitor Constancio will be speaking at the third annual ECB macroprudential policy and research conference at 1200 GMT. Minneapolis and Dallas Fed Presidents, Neel Kashkari and Robert Kaplan, will be also delivering comments at 1445 GMT and 1730 GMT respectively; neither holds voting rights within the FOMC in 2018. A meeting between the US President Donald Trump and NATO Secretary General Jens Stoltenberg in Washington to discuss on Israel, Iran, Syria and North Korea is also expected to attract interest.
Retail giant Walmart will be releasing its quarterly results before today’s opening bell on Wall Street.
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