European equities were a sea of green yesterday, supported by S&P’s decision on Friday not to downgrade Italy’s credit rating. Although the US markets closed negative, mainly due to reports that the US is preparing more tariffs on Chinese goods, Asian stocks bounced after US President Trump predicted a “great deal” with China. Tonight, the BoJ concludes its two-day gathering, but no change in policy is expected.
Sentiment Gets Boosted by Italy’s Rating Relief and Trump’s Remarks on Trade
The dollar traded higher against most of the other G10 currencies yesterday. It gained the most against the safe havens JPY and CHF, while it lost ground only against NZD. The greenback traded virtually unchanged against CAD, while AUD was among the currencies that managed to resist, ending only slightly down.
In our view, the FX-performance pattern suggests a “risk on” day overall. Indeed, most EU indices were a sea of green, perhaps boosted by
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