FX Update: The euro traded firmer
FX Update: The euro traded firmer amid a sharp drop in BTP yields on fresh signs of budgetary prudence from the new populist government in Italy. The biggest mover was EUR-CHF, which was up 0.3% as of the early London PM. EUR-USD was choppy, posting a high at 1.1774, then dropping to a 1.1733 low before lifting back above 1.1760. The pair remained below yesterday's two-month high at 1.1815 (seen after ECB President Draghi sounded relatively hawkish). USD-JPY posted a two-month high of 112.98 in the Tokyo AM, capping out here in the face of Japanese exporter offers. The release of the minutes to the recent BoJ meeting had little impact, and nor did a speech by BoJ Governor Kuroda, who said it will take longer than expected to bring inflation to the 2% target. There appears to be little appetite for follow-through ahead of a number of a slew of potentially market-jolting events this week. The Fed starts its two-day FOMC policy meeting today, which is widely expected to bring a 25 bp hike in the funds rate, leaving focus on the guidance, which will carry significant potential to move global markets given the prevailing sensitively of equity and emerging markets to hawkish narratives. On Thursday the Italian government releases its Economic and Financial Document, which will outline the scale of the planned fiscal deficit for 2019, and which will provide opportunity for judgements to sharpen on the credibility of the populist coalition government.