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EUR: Dollar story dominates over French politics – ING

Uncertainty in French politics has seen the OAT:Bund 10-year government spread settle above 80bp, ING's FX analyst Chris Turner notes.

Pro-global risk/soft USD environment remains the dominant theme

"French 10-year government borrowing costs now match those of Italy. We cannot rule out a further sell-off in French debt as France looks for a new government, but we do not see this as a euro-wide crisis. Here's an interesting note our team published on Belgium yesterday. As such, we think the pro-global risk/soft dollar environment remains the dominant theme for EUR/USD."

"The eurozone data calendar is quiet ahead of tomorrow's ECB meeting. We do, however, have the State of the European Union address from Commission President Ursula Von der Leyen. No doubt the focus will be on military strength."

"Expect EUR/USD to continue trading around the 1.1700 area - though we don't rule out a very temporary dip to the 1.1630/50 area later this week."

AUD/USD jumps to near 0.6600 as Australian Dollar gains on cheerful market mood

The AUD/USD pair advances to near 0.6600 during the European trading session on Wednesday.
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China: August CPI back in contraction – UOB Group

China’s CPI fell more than expected, by -0.4% y/y in Aug but core CPI continued to edge higher to 0.9% y/y from 0.8% y/y in Jul, marking an 18-month high as government policies stayed geared towards promoting domestic consumption, UOB Group's Economist Ho Woei Chen notes.
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