A relatively quiet FX Market saw the NZD trade a narrow range overnight, opening at similar levels to yesterday. The risk off tone to markets has been mainly reflected in equity prices, with stock markets falling in Asia, Europe and in the U.S overnight. Falling earnings outlooks for some large global companies has been driving the sell off, which has seen risk sentiment fall with continued concern over the global growth outlook. Oil prices have fallen by 4% overnight, while of the major currencies, the Japanese Yen was the best performer, up around 0.5%
The European Commission has officially rejected Italy’s budget proposal and asked the Country to revise and resubmit its plans within three weeks. Prior to the decision, Italian PM Conte said there wasn’t any “plan B”. The decision by the EC is the first time such a move has been made against a member state, which saw the Euro drop sharply before eventually making back most these losses.
Meanwhile, Euro Zone consumer sentiment came in a little bit better than expected, at -2.7 vs expectations of -3.2, but was still negative, highlighting that there are still more EU consumer pessimists that optimists.
Nothing of note on the local front, with the next NZ data being tomorrow mornings Trade Balance number for September. Elsewhere, the Bank of Canada is expected to raise interest rates tonight in response to solid economic growth and the new NAFTA deal recently announced.
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