Ipek Ozkardeskaya
Swissquote Bank Ltd
The FX markets kick off the week on an extremely chaotic note. Both the pound and the euro are being severely punished for the political decisions that are taken in the UK and in Italy respectively.
As expected, the far-right candidate Giorgia Meloni won a clear majority in Italy at yesterday’s election, with Brothers of Italy gaining more than 25% of the votes. And Meloni’s right-wing alliance with Salvini’s League and Berlusconi’s Forza Italia got around 43% of the votes: the terrible consequence of the pandemic, the war and the energy crisis.
The EURUSD has been shattered this morning. The pair dived to 0.9550.
But it’s almost worst across the Channel if that’s any consolation. Investors really hated the ‘mini budget’ announced in UK last Friday. Investors were expecting to hear about a huge spending package from Liz Truss government, but the package has been even HUGER than the market expectations.
UK’s 10-year yield jumped more than 20% since last week, the FTSE dived near 2% and Cable tanked below 1.0350 in Asia this morning.
Elsewhere, the US dollar index took a lift, and the dollar index is just crossing above the 114 mark at the time of talking.
Gold dived to $1626 on the back of soaring US dollar.
US crude oil plunged below $80 per barrel.
The S&P500 fell to the lowest levels since this summer, whereas the Dow Jones fell below the summer dip.
Happily, the European equities are better bid this morning, but investors remain tense and worried.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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