 Improved risk sentiment is the main theme of today. Italian stocks lead other Europeans higher as investors responded well to S&P's decision to keep Italy's ratings unchanged, two notches above junk. Additionally, auto shares are lifted by report that China is considering to cut car purchase tax by half. Yen and Swiss Franc are trading as the weakest ones, naturally, on improved risk appetite. Euro follows as the third weakest. On the other hand, commodity currencies are trading generally higher. US Dollar continues to trade mixed after data showed core PCE inflation unchanged at 2.0%, staying at Fed's target. In Europe, the Italy's FTSE MIB is currently up 2.37%, FTSE 100 is up 1.95%, DAX up 1.99% and CAC up 1.08%. German 10 year yield is up 0.0366 at 0.394, still below 0.4%. Italian 10 year yield dropped -0.123 at 3.307. German-Italian spread is improving at 291. Earlier in Asia, major indices closed mixed. China Shanghai SSE closed down -2.18% at 2542.17. But the closely correlated Hong Kong HSI closed up 0.28%. Nikkei lost -0.16% and Singapore Strait Times gained 0.32%. Japan 10 year yield dropped -0.0095 to 0.105, now very very close to BoJ's allowed range of -0.1 to 0.1%. Technically, USD/JPY, EUR/JPY and GBP/JPY have made temporary lows. But it's too early to confirm near term reversal. For now Dollar is holding in tight range in EUR/USD and GBP/USD. There is prospect of extending decline in these two pairs but we'd pay attention to loss of momentum on next fall. |
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