· The euro dipped against the greenback on Monday on renewed concerns about Italy’s budget, while the Canadian dollar gained after the United States and Canada reached a last-minute deal on Sunday to replace the North American Free Trade Agreement (NAFTA).
The euro was last down 0.27 percent against the greenback at $1.1577.
The single currency has been hurt by concerns that a significant increase in Italy’s budget will exacerbate the country’s already high debt levels.
Italian daily La Repubblica reported on Monday that the European Commission was set to reject Italy’s plans to lift its budget deficit to 2.4 percent of gross domestic product in 2019.
· The yen traded near its lowest in more than 10 months against the dollar on Tuesday, weighed down by increased risk appetite after the United States and Canada reached a last-minute deal on Sunday to replace the North American Free Trade Agreement.
The yen was broadly flat at 113.99 yen per dollar. It fell as low as 114.06 in the previous session, its weakest since November last year.
The dollar index, which measures the greenback against a basket of six currencies, edged higher to 95.310 after hitting a three-week high of 95.373 in the previous session.
The Canadian traded at C$1.2809 per dollar, holding on to most of its 0.7 percent gains from the previous day.
· A measure of U.S. factory activity retreated from a more than 14-year high in September as growth in new orders slowed, but supply bottlenecks appeared to be easing, suggesting a steady pace of expansion in manufacturing.
Other data on Monday showed a small increase in construction spending in August amid weakness in investment in private residential and nonresidential projects. The report did little to change views of strong economic growth in the third quarter.
The Institute for Supply Management (ISM) said its index of national factory activity dropped 1.5 points to a reading of 59.8 last month from 61.3 in August, which was the highest since May 2004. A reading above 50 indicates growth in manufacturing, which accounts for about 12 percent of the U.S. economy.
· The tight U.S. labor market may be good for workers, allowing them to jump between jobs more easily and coax higher wages from their boss.
But it may also pitch the economy toward unexpected inflation or other problems if it remains as low as the Federal Reserve anticipates, Boston Federal Reserve president Eric Rosengren said on Monday in remarks defending the case for continued interest rate increases by the Federal Reserve.
· U.S. Defence Secretary Jim Mattis said on Monday he did not see relations between the United States and China worsening, a day after his trip to China was canceled and tensions have started affecting military ties.
The United States and China are embroiled in a trade war, sparked by U.S. President Donald Trump’s accusations that China has long sought to steal U.S. intellectual property, limit access to its own market and unfairly subsidize state-owned companies.
Top euro zone officials warned Italy on Monday its plan to borrow billions of extra euros to fund spending pledges could tip the bloc back into crisis, vowing to pressure Rome to change course.
· Italy’s Finance Minister said on Monday that many European Union states have failed over the years to respect EU fiscal rules, but added that this does not mean that rules should be breached.
He admitted that Rome’s deficit target is not in line with EU rules, but stressed many countries have not respected the rules in the past.
· Auto parts output in Mexico will jump about 10 percent over the next three years as automakers scramble to adhere to stricter content rules laid out in a new North American trade deal, a top industry executive said on Monday.
· Canada, buoyed by a last-minute continental trade deal it sealed with the United States and Mexico, is pressing Washington to remove steel and aluminum tariffs, senior Canadian officials said on Monday.
The agreement, reached on Sunday night, protects Canada’s automotive industry from potentially devastating U.S. tariffs, but includes no assurance that Washington will lift punitive measures it imposed on Canadian and Mexican steel and aluminum in June.
· Prime Minister Justin Trudeau had made clear he felt the tariffs should be removed before the new United States-Mexico-Canada Agreement could be signed, but President Donald Trump’s administration has refused to act for now.
· Oil futures jumped more than $2 a barrel Monday, rising to levels not seen since November 2014, as U.S. sanctions on Iran loom and a North American trade deal fosters growth.
Brent futures LCOc1 settled at $84.98 a barrel, up $2.25, or 2.7 percent. In post-settlement trade, the contract continued to strengthen, rising to $85.45 a barrel, the first trade above $85 since November 2014. U.S. light crude futures CLc1 were up $2.05 a barrel at $75.30, the highest since November 2014.
Reference: Reuters
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