Italian Deputy PM Luigi Di Maio
The euro rallied on Monday as a fall in Italian government borrowing costs after their recent surge introduced some calm into the market, while the promise of more Chinese stimulus helped offset broader political worries.
Rating agency Moody's downgraded the Italian government's credit rating on Friday but unexpectedly kept the outlook at stable.
That, together with comments by Deputy Prime Minister Luigi Di Maio that the government was ready to sit down with the European Union amid the ongoing row over Rome's budget, boosted demand for Italian debt after a sharp selloff in recent weeks.
The euro has often fallen this year when Italian government bond yields have spiked higher.
Britain is open-minded about extending the post-Brexit transition period if it means the European Union drops its proposals for the so-called Irish backstop, Brexit minister Dominic Raab said on Sunday."If we need a bridge from the end of the implementation period to the future relationship ... I am open minded about using a short extension of the implementation period," Raab told BBC TV.Video: UK Brexit minister Raab says open-minded on extending post-Brexit transition"It is an obvious possible route as long as it is short, perhaps a few months, and secondly that we know how we get out of it and obviously it has to solve the backstop issue so that that falls away then as a possibility."Raab also said he thought a deal needed to be done by the end of November in order to get the legislation through the UK parliament in time.Thousands take to streets in London demanding second Brexit voteIreland insists on Brexit 'backstop'EU's Barnier says Brexit deal 90 pct done, but Ireland issue could derail it
UK Brexit minister Raab says open-minded on extending post-Brexit transition
The European Union will not accept a temporary measure to solve the issue of the Irish border in Brexit negotiations, France's Europe minister Nathalie Loiseau said on Sunday.Britain has said it could accept a longer post-Brexit transition period if the EU drops its proposals for the Irish backstop - an insurance policy to ensure there will be no return to a hard border on the island of Ireland. Britain has said any such extension must be time-limited."We have to have a definitive answer or at least no temporary measures which disappear and we don't know what to do after that," Loiseau told BBC TV."This is something that has to be fixed by London ... We are waiting for a workable solution coming from London."Thousands take to streets in London demanding second Brexit voteGreek PM says EU Commission approved Greek budget without pension cutsEU, UN agree Sochi deal must be ‘fully implemented’
EU cannot accept temporary measure on Irish border: French minister
The single currency rose 0.3 percent to $1.1550, hitting the day's high and away from recent lows of $1.1433.
The dollar index dropped 0.3 percent to 95.472.
The euro was also 0.2 percent higher at 1.1487 Swiss francs , and gained 0.2 percent versus sterling to 88.26 pence .
Despite the euro's rally, analysts said it remained at the mercy of Italian developments, with a great deal of uncertainty ahead.
"...A full diary of risk events over the next two weeks and little to argue in favour of support from the ECB (European Central Bank) in the near future, the question remains over how far the yield gap can blow out and how this could translate back into the FX market," said Simon Derrick, chief currency strategist at BNY Mellon.
Equity markets were largely in positive territory as hopes that China's tax cuts next year could be worth more than one percent of gross domestic product sparked a rally in Asian shares that fed across to Europe.
That helped offset geopolitical concerns about the rift between Saudi Arabia and the West over the killing of a prominent critic of the kingdom, as well as worries about Britain securing an exit deal with the EU.
Siemens boss Joe Kaeser came under pressure from senior German politicians on Sunday to pull out of an investment conference in Saudi Arabia next week following Saudi journalist Jamal Khashoggi's death.Many business executives including the heads of Deutsche Bank, Uber Technologies and Siemens rival ABB have dropped out of Riyadh's Future Investment Initiative conference amid outrage about Khashoggi's fate.The leader of the Social Democrats (SPD), Andrea Nahles, called on Kaeser to follow the example of other executives and cancel his plans to attend the conference."I hope that Joe Kaeser will rethink this," she told the Bild am Sonntag newspaper.Germany calls into question arms sales to Saudi over Khashoggi deathForeign Minister Heiko Maas, also from the SPD, told German public television on Saturday evening that cancellations sent the right signal."I certainly wouldn't participate in an event in Riyadh at the moment," he said. "And I have great understanding for those who have cancelled."Norbert Roettgen, a member of Chancellor Angela Merkel's Christian Democratic Union who chairs the German parliamentary foreign affairs committee, also urged Kaeser to skip the event.Amid scepticism, Saudi official provides another version of Khashoggi death"This applies in my view, for example, to the Siemens CEO who has confirmed his attendance," he told the Welt am Sonntag newspaper.A spokesman for Siemens said Kaeser had not yet decided whether to attend the conference. He said he expected Kaeser to make a decision on Sunday.The engineering conglomerate has won orders to supply gas turbines, power plant components and trains to Saudi Arabia. Last year, it signed a declaration of intent to work with Saudi authorities to equip infrastructure projects which Siemens said could be worth at least a billion euros.Merkel and Maas have reacted strongly to Saudi Arabia's admission that Khashoggi died in the Saudi consulate in Istanbul, condemning the killing and demanding Riyadh make clear what happened.($1 = 0.8686 euros) Merkel demands full facts on Khashoggi’s killing
Top German politicians press Siemens boss to skip Saudi conference
Italy's government should not ignore the problems that soaring government bond yields are causing for Italian banks, including possible capital needs, Cabinet Undersecretary Giancarlo Giorgetti said in a newspaper interview on Sunday.Giorgetti also told Italian daily Il Messaggero that next year's budget deficit may turn out to be lower than the proposed 2.4 percent of gross domestic output.The profligate budget plans of Italy's populist government have prompted investors to shed 67 billion euros ($77 billion) of Italian government bonds since May, sending the yield premium Italy pays over safer German paper to more than 3 percentage points."The increase in the (bond yield) spread, the amount of public debt banks hold and new European Union banking rules put the industry under pressure and may generate the need to recapitalise the most fragile lenders," said Giorgetti, who is an influential member of the far right League, one of the two parties in Italy's ruling coalition.Italian banks had been raising capital in recent years to restructure after a deep recession that turned almost a fifth of all bank loans sour.The clean-up was just beginning to bear fruit when lenders were hit by a spike in Italy's debt costs, which hurts the value of their large sovereign holdings, eating into their capital.Pummelled by investors, Italian banks' shares trade at a fraction of the value of their assets but the growing uncertainty over Italy's prospects would make it hard for them to raise capital."We can't just pretend nothing is happening and ignore these problems," Giorgetti said.He said the government was made up of "responsible people who would do things responsibly."After initially rebuffing criticism from Brussels over a sharp deficit increase in the draft 2019 budget, which the European Commission has labelled an "unprecedented" breach of EU fiscal rules, Italy appeared to have softened its stance.On Saturday, Prime Minister Giuseppe Conte said Rome wanted to establish a "constructive dialogue" with the EU over the budget because it recognised the role of European institutions."The 2.4 percent figure is a ceiling for all the various measures included in the budget, but it's not a given that all of them can be implemented because there could be technical difficulties," Giorgetti said.The coalition comprising the League and the anti-establishment 5-Star Movement wants to boost deficit-spending to lower the retirement age and provide a basic income for the poor. ($1 = 0.8686 euros) Ryanair trumpets progress in relations with European pilotsBuild trust with EU partners on budget, Merkel tells Italy's Conte
Italy should not ignore damage to banks from soaring bond yields, official tells paper
Forex markets were largely quiet, although the more positive tone at the start of the week did buoy sentiment.
For the dollar, a hawkish Federal Reserve and signs of continued strength in the U.S. economy remain key drivers.
"Markets will be closely watching the release of the U.S. advance GDP number on Friday for more clarity on the direction of the U.S. dollar," said Sim Moh Siong, currency strategist at Bank of Singapore.
The dollar rose versus the Japanese yen. The yen fetched 112.71, down 0.2 percent on the day and off a one-month high of 111.61 touched on Oct. 15.
The yen had benefited from rising risk around Brexit, the Italy budget plan and trade tensions, because investors tend to buy the Japanese currency when they are nervous.
The Canadian dollar changed hands at 1.3080 on its U.S. counterpart, within striking distance of a five-week low of 1.3132 hit on Friday on the back of weaker inflation and retail sales.
The Australian dollar, often considered a barometer for global risk appetite, traded at $0.7122, flat on the day.
One African migrant died and three others were injured when around 300 stormed the border fence separating Spanish enclave Melilla from Morocco on Sunday, the local authorities said.About 200 migrants managed to scale the seven-metre high metal barrier and were taken to a reception centre in Melilla where officials started the process of identifying them.The man died of a suspected cardio-respiratory arrest despite being treated by emergency services, the Spanish government's local delegation said in a statement.More than 6,000 migrants have made it to Melilla and Spain's nearby territory Ceuta so far this year, according to the U.N. refugee agency UNHCR. In some places, the fences around the enclaves are topped with razor wire.On Sunday, wooden-handled hooks and shoes fitted with spikes to help the climb were left behind, along with a bloodied t-shirt.More than 40,000 have arrived by sea on Andalucia's southern coast since January, making Spain Europe's top destination for migrants which the European Union has failed to agree on how to handle.The routes have changed as Italy clamped down on rescue ships to dock at its ports, and a deal between the EU and Turkey eased flows across the Aegean Sea to Greece.The vast majority of arrivals in Spain are men, primarily from Guinea, Mali and Morocco, the UNHCR says.On Saturday, Spain returned to Morocco 24 migrants who reached the Chafarinas islands, another Spanish territory off the North African coast, under a bilateral agreement signed in 1992, under which citizens of third countries who have entered illegally can be returned within a certain time frame.This agreement was very rarely used until this summer, when 116 men who stormed the Ceuta fence were turned back. Spain's Interior Ministry says it is being used now thanks to good bilateral relations.African billionaire abducted in Tanzania returns home safely11 killed, thousands displaced by Yemen tropical stormSix killed, thousands displaced by Yemen tropical storm
Hundreds of migrants storm Spanish enclave in North Africa, one dies
The EU's chief Brexit negotiator Michel Barnier stood firm on the need for checks on goods shipped from mainland Britain to Northern Ireland after Brexit, while insisting this would not amount to a new border, in an interview published on Sunday.Negotiations on Britain's departure from the European Union are stalled on several issues, but primarily an Irish 'backstop' both sides agree is needed to avoid a hard border between the UK province of Northern Ireland and the Irish Republic, an EU state.Brussels insists that this in turn requires controls on goods shipped from mainland Britain to Northern Ireland, and is trying to overcome objections from among UK Prime Minister Theresa May's Conservatives and the Northern Ireland Unionists crucial to her government's parliamentary majority.Croatians protest over government plan to raise retirement ageTrump a reluctant critic of Saudi Arabia despite pressure to act"Contrary to what some are saying, this is not a border we are creating in the Irish Sea to undermine the integrity of the United Kingdom," Barnier told Le Journal du Dimanche.Veterinary checks are already conducted on 10 percent of livestock transported to Northern Ireland from the rest of the UK, Barnier said. This would increase to 100 percent under the backstop, he added, but a later animal-health agreement could reduce the proportion inspected to 40 percent.Barnier said other backstop measures were needed to prevent unauthorised Irish imports of goods such as chlorinated chicken, produced in the U.S. but outlawed by EU food standards.He said other issues still preventing a deal include the demand by Brussels that the European Court of Justice should have jurisdiction over its implementation - as well as Britain's reluctance to address registered designations of origin for foodstuffs, such as champagne or Roquefort cheese.European Parliament urges investigation on KhashoggiGreek PM says EU Commission approved Greek budget without pension cutsEU, UN agree Sochi deal must be ‘fully implemented’
EU's Barnier plays down 'backstop' checks on Northern Irish trade