Italy: Things not looking good - Rabobank

Sandeep Kanihama FXStreet Contributor

A draft version of the agreement between Italy’s M5S and Lega has been leaked to the Italian Huffington Post website and it’s not looking pretty, according to analysts at Rabobank.

Key Quotes

“They want the ECB to cancel the EUR 250bn of Italian bonds that are purchased under QE, they want to “radically reform” the stability and growth pact and the fiscal compact, reduce Italy’s contribution to the EU budget, while, at the same time, they also want money from the European Social Fund to fund their basic income plans. And if that’s not enough, they also want to create a mechanism for a Euro exit, scrap sanctions against Russia and implement pension reforms that effectively lower the retirement age. According to M5S/Lega, this is an “old” version of the agreement (even as it is dated May 14...) which has already been revised, most probably after pushback from President Mattarella. To be continued today, that’s for sure, but BTPs are (finally) opening weaker.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

EUR/USD makes a U-turn, focus on 1.1900

EUR/USD’s recovery picks up further pace, prompting the pair to retarget the key 1.1900 barrier amid further loss of momentum in the US Dollar on Wednesday. Moving forward, investors are expected to remain focused on upcoming labour market figures and the always relevant US CPI prints on Thursday and Friday, respectively.

GBP/USD sticks to the bullish tone near 1.3660

GBP/USD maintains its solid performance on Wednesday, hovering around the 1.3660 zone as the Greenback surrenders its post-NFP bounce. Cable, in the meantime, should now shift its attention to key UK data due on Thursday, including preliminary GDP gauges.

Gold holds on to higher ground ahead of the next catalyst

Gold keeps the bid tone well in place on Wednesday, retargeting the $5,100 zone per troy ounce on the back of modest losses in the US Dollar and despite firm US Treasury yields across the curve. Moving forward, the yellow metal’s next test will come from the release of US CPI figures on Friday.