Italy risk premium drops as Draghi touted to be next Prime Minister

Omkar Godbole FXStreet Contributor

As represented by the spread between Italy and German 10-year bond yields, the Italian risk premium fell on Wednesday, as the European Central Bank's former pro-EU chief Mario Draghi accepted a mandate to try to form a new Italian government.

The spread fell by eight basis points to 106 basis points as investors cheered the idea of having a banker-led government. Draghi headed the ECB through the worst of the Eurozone's debt crisis in 2012 when he assured markets that the central bank would do "whatever it takes" to keep the bloc together.

A continued decline in the Italian risk premium may put a bid under the common currency.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

Japanese Yen gains ground as traders await Fed rate decision

The USD/JPY pair loses ground to near 160.25 during the early European trading hours. Traders prefer to wait on the sidelines ahead of the US Federal Reserve interest rate decision under new Chair Kevin Warsh later on Wednesday.

AUD/USD stays pressured; holds above 0.7050 as traders await Fed decision

The AUD/USD pair struggles to capitalize on the previous day's hawkish Reserve Bank of Australia-inspired bounce and trades with a negative bias for the second consecutive day on Wednesday. Spot prices, however, hold above the 0.7050 level as traders opt to wait for the outcome of a two-day FOMC policy meeting before placing fresh directional bets.

Gold remains depressed but holds above $4,300 as traders seem hesitant ahead of Fed

Gold remains on the back foot heading into the European session, though it lacks follow-through selling and holds comfortably above the $4,300 mark. Traders now seem hesitant ahead of the highly anticipated FOMC policy decision, keeping the commodity below the weekly high.

DOGE near breakout, SHIB at its ceiling and PEPE leads meme coin recovery

Meme coins are approaching a key technical level, which could determine the next directional bias. Dogecoin struggles to overcome a major resistance level, and Shiba Inu recovery lost momentum near a crucial barrier. Meanwhile, Pepe extends its rally for a sixth straight day, raising the prospects of further upside if momentum persists.

Federal Reserve set to hold interest rates in Warsh's debut as chair

The United States Federal Reserve announces its interest rate decision on Wednesday, another pivotal meeting for markets to gauge the stance of policymakers and new Chair Kevin Warsh as energy prices retreat after the United States and Iran reached a framework deal to reopen the Strait of Hormuz.

Why a hawkish RBA is no longer enough to lift the Australian Dollar

The Reserve Bank of Australia delivered more than what markets expected: a hawkish hold that should have supported the Aussie. But markets widely ignored it, focusing instead on slowing economic growth and proving that central bank messaging alone isn’t always enough to drive currencies.