First Deputy Governor of the Riksbank Kerstin af Jochnick crossed the wires in the last minutes noting that the risk of hard Brexit had increased. Regarding the current state of the Swedish economy, Jochnick said that June and July outcomes were in line with their inflation forecasts and that they were expecting decent growth of the economy. "The recent data doesn't suggest dramatic slowdown of the world economy," Jochnick argued. "The market is more pessimistic than Riksbank." The EUR/SEK pair retreated slightly from the 12-day high that it set earlier in the session and was last seen trading at 10,7697, still adding 0.4% on a daily basis.

GBP/USD is weak below 1.2100 in the New York session The levels to beat for bears are the 1.2065 and 1.2052 levels. GBP/USD daily chart The Cable is trading in a bear trend below the main daily simple moving averages (SMAs). GBP/USD 4-hour chart GBP/USD is trading below 1.2097 resistance and the 100/200 SMAs suggesting a bearish bias in the medium term. The levels to beat for bears are 1.2065, followed by 1.2052, 1.2021 according to the Technical Confluences Indicator. GBP/USD 30-minute chart GBP/USD is losing steam on Tuesday. Immediate resistances are seen at 1.2097, 1.2122, 1.2141, 1.2154 and the 1.2173 level, according to the Technical Confluences Indicator. Additional key levels

EUR/USD remains fragile near weekly lows. Italy’s PM Conte criticised Lega’s no-confidence motion. Attention stays on FOMC minutes and Powell’s speech. EUR/USD is now meandering the 1.1070/80 area as the speech by PM M.Conte before the Senate is under way. EUR/USD remains unable to pick up pace The downtrend in the pair looks unabated so far today against the backdrop of increasing cautiousness ahead of the publication of the FOMC minutes on Wednesday and the speech by Chief J.Powell at the Jackson Hole Symposium on Friday. EUR stays vigilant as well on political developments in Italy, where PM M.Conte said the Lega’s decision to present a ‘no-confidence’ motion will have consequences for the country and will likely prevent the budget to be passed in time. Conte also argued that the VAT would likely be raised. Earlier in the euro-docket, German Producer Prices rose 0.1% on a month to July and 1.1% from a year earlier. What to look for around EUR EUR has finally succumbed to th..

Additional comments from Italian Prime Minister Giuseppe Conte continue to cross the wires as he addresses the Italian Senate. Below are some key quotes, per Reuters. "Salvini trampled on measures for social welfare the government has approved." "Salvini detached himself from the government after European elections, seeking pretext to bring it down." "Dissolving parliament would block justice reform which would help make Italy more attractive to foreign investors." "Worried by Salvini's threat to organise street protests if elections not called." "Government crises must be resolved in parliament, not on the streets." "League made him wait two months before being willing to discuss 2020 budget." "Scandal over Russian funding of league needs clarifying." "Salvini often interfered with the responsibilities of other ministers, hurting the government's effectiveness."

Additional comments from Italian Prime Minister Giuseppe Conte continue to cross the wires as he addresses the Italian Senate. Below are some key quotes, per Reuters. "Italy now may be weakened in negotiations with the EU." "Salvini followed personal and party interests." "Salvini's moves show little sense of state." "Country risks financial instability." "Salvini acted with political opportunism." "August political crisis paves the way for an autumn vote." "Hard to reconcile Salvini's decision to present no-confidence motion but not withdraw League ministers from the government." "Salvini's move offended both me and the League's ministers." In the meantime, the EUR/USD stays flat on the day at 1.1075.

Mazen Issa, senior FX strategist at TD Securities, suggests that as the market awaits key Fed events in the minutes and the symposium this week, the broad USD is off to a firm start and it comes against a backdrop of suppressed Treasury (and global) bond yields. Key Quotes “We think this firmness can continue, at the very least on a tactical basis as we think the Fed will not be able to bridge the gap between aggressive easing priced into the curve and the Fed's definition of a "mid-cycle adjustment". As such, we see a risk that US yields adjust temporarily and tactically higher in the short-term in the coming days (a dynamic which we think will be met with inevitable demand).” “We do not expect the USD to be immune to this adjustment and perhaps more durably than the rates market. There are some signs that the recent bid in the USD may persist for a while longer. For one, even with the rally in US 10s in recent weeks, the USD still remains the only game in town as far as carry..

Nathan Janzen, senior economist at the Royal Bank of Canada, notes that Canada’s June manufacturing sales were on the soft side, declining 1.2% in total, but perhaps not quite as soft as feared given an earlier-reported sharp drop in exports for June. Key Quotes “Most of the headline manufacturing sales decline was due to a drop in prices, including a big 5% drop in petroleum and coal prices. The 0.2% dip in headline sales once controlling for price changes followed a 1.7% jump in May.” “Overall in Q2, manufacturing sale volumes increased 7.3% (at an annualized rate) from Q1 and 2.9% from a year ago. We are still tracking a ~3% increase in overall Q2 GDP.”

Addressing the Italian Senate on Tuesday amid the political turmoil, Italian Prime Minister Giuseppe Conte said that the League party's decision to present a no-confidence motion was 'grave' and added that it will have consequences for the country. Conte further added that Deputy Prime Minister (PM) Matteo Salvini has violated the initial commitment, and the League's move suddenly interrupted government's reforms. Conte also noted that the budget will not pass in time following the League's action and that the may be forced to increase the VAT. The shared currency's reaction to Conte's remarks is so far mixed with the EUR/USD pair trading flat on the day at 1.1075.

DXY navigates a tight range between 98.30/40. Yields of the US 10-year note keep declining, near 1.56% now. Markets’ attention remains on FOMC and Powell. The US Dollar Index (DXY), which tracks the Greenback vs. a bundle of its main rivals, is alternating gains with losses on Tuesday around the 98.30/40 band. US Dollar Index cautious ahead of Powell, looks to yields The index keeps the multi-session rally well and sound above 98.00 the figure so far on Tuesday, although it has come under some downside pressure in response to shrinking US yields and fresh demand for safe havens like the JPY. No news on the trade front has rendered the recent rhetoric by President Trump as innocuous, while investors appear to have re-shifted their interest to the money markets and the 2y-10y yield curve. Nothing in the calendar other than the API report scheduled for later today and ahead of tomorrow’s Existing Home Sales and the EIA’s weekly report on US crude oil supplies. What to look for aro..

Responding to EU officials remarks that they are not going to reopen the Withdrawal Agreement to negotiations, British Prime Minister Boris Johnson's spokesman stated that there is no prospect of a Brexit deal unless the backstop is abolished and the Withdrawal Agreement is reopened. "We are ready to negotiate, in good faith, an alternative to the backstop," the spokesman said. "Irish foreign minister expressed concern to the UK Brexit minister at the lack of alternatives to the backstop in rime Minister's letter." The UK's stance on Brexit is nothing new and markets largely ignored these headlines with the GBP/USD pair moving sideways in the negative territory near the 1.21 handle.