JPY the clear winner as risk appetite takes...>

FOREX: JPY the clear winner as risk appetite takes a turn for the worse

-Equities soured throughout the session from Asia, Europe to the US amid market

holiday-thinned trade. The Italian government remained combative in their budget

discussions with Brussels, prompting a rare response from EU's Moscovici, who

urged the still-young Italian governing coalition to soften the tone of the

budget talks. Italian yields rallied across the curve, denting the EUR and

prompting equities to drop over 1% across the continent. EUR/JPY fell sharply,

confirming the fall through the 200-dma and fast approaching the 50- and

100-dmas.

-GBP was one of the worst performers despite a modest recovery last week:

underlying hopes that progress could be made on a Brexit withdrawal deal in the

coming days were dashed as Downing Street stated the Brexit minister has no

plans to visit Brussels. GBP/USD dipped back below the 100-dma.

-Datapoints are few and far between Tuesday, but Fed's Kaplan and Harker, BoE's

Broadbent and ECB's Villeroy are all due to speak and may keep markets on their

toes.