In view of the Fabio Balboni, European Economist at HSBC, a series of key events in the next few weeks could shape Italy's political calendar this year and affect market sentiment.
Key Quotes
“On 11 January, the Constitutional Court will say whether the referendum on the Jobs Act proposed by Italy's main union is constitutional or not. If approved, it has to take place between 15 April and 15 June, unless an early election is called. Given the ruling party Partito Democratico is unlikely to want to bear the negative political consequences of another possible referendum loss, it could decide to bring forward elections. Legal experts quoted in the Italian press have suggested, however, that the Court might turn down the referendum request for the most important issue at stake, the reintroduction of Article 18, in place until two years ago, which used to make it impossible for firms to sack workers.”
“On 13 January, rating agency DBRS will conclude its review of Italy. DBRS is the only agency that still has Italy on an A-rating, and a possible downgrade could mean bigger haircuts might be imposed by the ECB on Italian sovereign bonds (and other assets) by the ECB. Although the direct implications for the banks are unlikely to be high, it could spur further negative market sentiment on Italian sovereign bonds.”
“On 24 January, the Constitutional Court will have a hearing on the electoral law for the lower house, the Italicum. This will kick-start the parliamentary debate on the issue, with the objective of realigning the electoral laws for the lower and upper house. Once this process is completed, elections can take place. We still expect the electoral law(s) to end up being a slightly softer version of the Italicum, favouring some form of coalition government in the future (making it harder for the populist euro-sceptic Five Star Movement to form a government on its own).”
“We still see early elections in Q2 2017 or possibly after the summer if the Jobs Act referendum is rejected. The new caretaker government also approved at the end of 2016 a bank rescue fund of up to EUR20bn (1.2% of GDP) to be used first for Monte dei Paschi di Siena. Such a fund does not provide a comprehensive solution to Italy's banking sector challenges yet, which are also likely to remain a key theme in 2017.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD risks a deeper drop in the short term
AUD/USD rapidly left behind Wednesday’s decent advance and resumed its downward trend on the back of the intense buying pressure in the greenback, while mixed results from the domestic labour market report failed to lend support to AUD.
EUR/USD leaves the door open to a decline to 1.0600
A decent comeback in the Greenback lured sellers back into the market, motivating EUR/USD to give away the earlier advance to weekly tops around 1.0690 and shift its attention to a potential revisit of the 1.0600 neighbourhood instead.
Gold price edges higher on risk-off mood hawkish Fed signals
Gold prices advanced late in the North American session on Thursday, underpinned by heightened geopolitical risks involving Iran and Israel. Federal Reserve officials delivered hawkish messages, triggering a jump in US Treasury yields, which boosted the Greenback.
Bitcoin Price Outlook: All eyes on BTC as CNN calls halving the ‘World Cup for Bitcoin’
Bitcoin price remains the focus of traders and investors ahead of the halving, which is an important event expected to kick off the next bull market. Amid conflicting forecasts from analysts, an international media site has lauded the halving and what it means for the industry.
Is the Biden administration trying to destroy the Dollar?
Confidence in Western financial markets has already been shaken enough by the 20% devaluation of the dollar over the last few years. But now the European Commission wants to hand Ukraine $300 billion seized from Russia.