Analysts at ANZ Bank New Zealand Limited explained that trading was quiet with a lack of data and no further developments on the trade front keeping volumes light.
"Equities lifted a touch in Europe and were mixed in the US.
The S&P was up 0.3% at the time of writing; the DJIA was down 0.1%. USD was generally weaker. GBP was the biggest mover on the day with comments from Barnier that a deal could be reached by November sparking a rally. EUR also rose on the Brexit news, adding to the more positive tone after the Italian Finance Minister commented over the weekend that the government knows they need to cut debt and keep the budget deficit under control. NOK rose the most in the G10 after inflation rose to 1.9%, bolstering the case for a rate rise later this month. The US yield curve flattened with 2-year up 0.8bps and 10-year down 0.5bps. Italian yields fell 10-18bps. WTI dipped 0.2% and gold rose 0.1%.
"SLIP: Eurozone Sentix investor confidence fell 2.7 points in September to 12. While below market expectations, the index is still sitting above June lows. But with a number of factors weighing on investors at present (including Brexit, political troubles in Italy, emerging market wobbles, and the potential fallout from further escalation in the trade war saga) sentiment may remain subdued for a while yet.
BETTER: UK trade balance improved in July. The goods trade deficit narrowed from a downwardly revised deficit of £10.7bn in June to £10bn in July (mkt: £11.7bn). When services are included, the trade deficit narrowed to £0.1bn in July. In the three months to July, the deficit in goods was £32.6bn and the surplus in services was £29.2bn leaving an overall deficit of GBP3.4bn for the 3 month period. This is important from a sterling valuation perspective. UK trade data are very close to balance and argue against the need for further sustained GBP depreciation. That said, Brexit sentiment and uncertainty remains the dominant influence in the FX market and that’s swinging daily at the moment. Meanwhile, UK GDP lifted 0.3% m/m in July (mkt: 0.1%) with solid services output supported by warmer weather and the World Cup. On a three-monthly basis, growth accelerated to 0.6% in July, from 0.4% in June."
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