2018.10.0303:39:00UTC+00Euro Climbs On Reports Of Italy Lowering Budget Deficit Target For 2020, 2021

The euro strengthened against its major counterparts in the Asian session on Wednesday, following a media report that Italy plans to reduce budget deficit by 2.0 percent in 2021.

The Italian newspaper Corriere della Sera reported that the government estimates a budget deficit of 2.4 percent of GDP for 2019, and then slash it to 2.2 percent for 2020.

Italian bond yields fell after the report, with the benchmark yield on 10-year note falling by 3.34 percent.

Investors heaved a sigh of relief after Italy's Prime Minister Giuseppe Conte said the euro was "unrenounceable".

"Italy is a founder member of the European Union and of the monetary union and I want to reiterate that," Conte said on Facebook.

Retail sales data and final composite Purchasing Managers' survey reports from euro area are due shortly.

The euro climbed to a 2-day high of 1.1413 against the franc, from a low of 1.1357 hit at 5:00 pm ET. The euro is poised to find resistance around the 1.16 mark.

The single currency appreciated to a 2-day high of 1.1594 against the greenback, after falling to 1.1536 at 9:15 pm ET. The euro is seen finding resistance around the 1.17 level.

The euro snapped back from an early low of 0.8892 against the pound, rising to a 6-day high of 0.8918. If the euro rises further, 0.90 is likely seen as its next resistance level.

Having declined to 130.97 against the yen at 9:20 pm ET, the euro reversed direction and rose to 131.98. The euro is likely test resistance around the 134.00 area.

The latest survey from Nikkei showed that Japanese services sector continued to expand in September, but at a sharply slower pace, with a two-year low score of 50.2.

That's down from 51.5 in August, although it remains barely above the boom-or-bust line of 50 that separates expansion from contraction.

The euro strengthened to a 2-day high of 1.4858 against the loonie, 5-day highs of 1.6146 against the aussie and 1.7615 against the kiwi, reversing from its early lows of 1.4800, 1.6056 and 1.7510, respectively. On the upside, 1.50, 1.63 and 1.78 are likely seen as the next resistance levels for the euro against the loonie, the aussie and the kiwi, respectively.

Looking ahead, PMI reports from major European economies and Eurozone retail sales for August are due in the European session.

Federal Reserve Bank of Richmond President Thomas Barkin will give a speech titled "The Outlook for Tomorrow: Five Numbers to Watch" at the West Virginia Economic Outlook Conference at 8:05 am ET.

At 8:15 am ET, ADP private sector employment data for September is scheduled for release.

In the New York session, U.S. ISM non-manufacturing composite index for September will be out.

At 2:00 pm ET, Federal Reserve Governor Lael Brainard speaks about the payment system at the FedPayments Improvement Community Forum in Chicago.

Fifteen minutes later, Federal Reserve Bank of Cleveland President Loretta Mester will speak at the Community Banking in the 21st Century conference at the Federal Reserve Bank of St. Louis.