Renewed Italy uncertainty dents risk..........>

FOREX: Renewed Italy uncertainty dents risk appetite

-Italian politics remains volatile, with the young governing coalition still

disunited on agreeing a fiscal deficit target, let alone firming an agreement

that would pass the Brussels litmus test. This has resulted in Italian bonds

being sold off sharply from the open, extending yields through recent highs and

denting the EUR against most others.

-Risk havens are benefiting, with JPY and CHF two of the strongest currencies in

G10 this morning. JPY gains were further spurred by Japanese names taking

advantage of recent EUR/JPY and USD/JPY rallies to hedge the weaker domestic

currency, sending USD/JPY back below Y114.

-The RBA unsurprisingly kept policy on hold, doing little to trouble the AUD,

while GBP softened on poorer than expected construction PMI and ongoing

uncertainty surrounding new customs rules between N. Ireland and the rest of the

UK. This keeps the Conservative Party Conference in focus, due to conclude

tomorrow.

-Data is few and far between, with focus remaining on Friday's nonfarm payrolls.