The money flow at the beginning of the European trading session

The comparatively quiet Asian trading session failed to reassure investors, as early gains quickly became traders' losses. The New Zealand Central Bank left its interest rates unchanged in a decision that was so much expected that the markets did not move. In the United States, the Fed raised its interest rates during the previous session, and although it wasn't against all of the predictions, there were surprises. The dollar initially sold out, then regained its position. The central bank's statement was hiding the clue: "The monetary policy stance is still accommodative," and this sentence was completely eradicated by the latest statement, which hurt the US dollar, so the question people ask is, "Why the removal of that word is it accepted as a passive / dovish signal? The answer here is that the Fed strives to reach neutrality. They do not know exactly when this will happen, but once they are no longer accommodative, they may already be neutral. Or at least be very close to that. However, this does not in any way suggest exactly how much monetary policy will be tightened. Brainard also proposed the idea of ​​short-term neutrality and long-term neutrality. So yes, they can continue with promotions in the long run, it is not known exactly when.

All this has led investors to believe that new interest rates will rise, which is not necessarily positive for the stock. Financial sectors all over Asia have declined, and I expect exactly this result for the European ones in a few hours. Today, Europe remains relatively quiet of economic news, so central bank statements will have the greatest impact.

The Japanese yen is at key locations against the dollar, with a double peak formed, and yesterday the day bar closed as swallowing. This may give sellers the lead and the dollar will lose weight further in today's session.

With so much going on in markets right now, it wouldn't be surprising if traders decide to put the FOMC meeting decision yesterday in their back pockets for the time being. There's still the US-China trade rhetoric, Brexit risks, NAFTA deadline fast approaching, emerging market woes, Trump's battle against Iran, Russia, North Korea, and rising global trade tensions among other things.

And let's not forget, there's still the risk of the 2019 Italian budget deficit. Today, the government will be unveiling its economic document which will include financial targets that will make up the budget.

Yesterday, finance minister Tria offered a little glimpse of what to expect as he said the budget will include Di Maio's plan of introducing citizens' income. He was tight-lipped about the scale of it and how it will be financed but I reckon this is more of a compromise more than anything else.

Tria has been pushing for a deficit of 1.5% to 1.8% but Di Maio's fiscal plans will already run up to a 1.5% deficit in itself, so that begs the question how will all of this fit in to equate to a deficit of under 2%.

That's the threshold level that markets are looking at right now. The other key dates moving forward for Italy is 15 and 20 October. The former being when Italy submits their draft budget to the European Commission while the latter is when the actual measures have to be approved by the Italian cabinet.

There hasn't been much impact on the euro in all of this as nothing has really firmed up just yet. The market moves have largely been isolated to Italian assets only. But if things do turn sour I don't expect the euro to be unscathed from the risks associated to Italy's debt situation.

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