{"id":36476,"date":"2013-02-26T11:35:04","date_gmt":"2013-02-26T16:35:04","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=36476"},"modified":"2013-02-26T11:35:04","modified_gmt":"2013-02-26T16:35:04","slug":"italian-elections-weigh-heavy-on-euro","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/02\/26\/italian-elections-weigh-heavy-on-euro\/","title":{"rendered":"Italian Elections Weigh Heavy on Euro"},"content":{"rendered":"

By Richard Wiltshire \u2013 Chief of Foreign Exchange Dealing at ETX Capital<\/a><\/span><\/strong><\/p>\n

Total disappointment, bordering on total disbelief, in the Italian elections saw investors run for cover and widespread cutting of major \u201crisk positions\u201d in the euro and its crosses. Despite some stabilisation this morning, where the euro has tried to stage a fight back, the prevailing penchant to sell any rallies remains.<\/p>\n

A timely reminder perhaps that the Euro Zone is far from out of the woods, with the lack of enthusiasm for austerity and reform (and Spanish and Greek debt problems rearing their ugly heads again of late) adding to the high level of political uncertainty and likely to cause wider and more volatile government bond spreads, thus weighing on the single currency in the coming weeks\/months.<\/p>\n

EURJPY was the catalyst as it collapsed circa 5% at one stage as \u201crisk\u201d trades, funded in the Yen, were unwound causing stops galore to be triggered and order books at large market making banks to be \u201ccleaned out\u201d.<\/p>\n

Today\u2019s market has a nervous, uneasy feeling that is being played out through knee-jerk reactions on \u00a0thinner than usual liquidity and a tendency for wider spreads , as can be the case after such disorderly moves.<\/p>\n

So, to Italy, where Mr Berlusconi\u2019s most popular election promise of offering to refund the property tax imposed by the previous Monti government, threatened at one point, to bring about one of the most unlikely comebacks. \u00a0What we have, in fact, is most likely the worst possible outcome. \u00a0No party is able to form a government, more elections are likely to be in the pipeline and uncertainty (the thing risk takers and markets seem to like the least) reigns. \u00a0Coalition(s) will need to be formed and deals will have to be done – with Signor Bersani more likely to favour an alliance with Grillo than Berlusconi, but Grillo stating co-operation with Bersani \u00a0is not something he would consider, and Berlusconi just glad to be back in the limelight and the thick of things and likely to be open for a hook up with anybody! \u00a0And all this in a country that is the third largest economy in the Euro zone, and where politicians have not exactly covered themselves in glory in the past.<\/p>\n

All of a sudden, the new found \u201cOMT\u201d optimism towards the single currency of early January seems a lifetime ago, with Euro firmly back in the spotlight and \u201csafe havens\u201d \u00a0once again being actively sought out. \u00a0Expect many column inches to once again be dedicated to subjects such as \u201cperipheral yields\u201d and be wary of comments emanating from the European powerhouse Germany regarding the need to continue down the austerity and reform path that won\u2019t exactly be met with open arms south of the Brandenberg Alps.<\/p>\n

For EURUSD 1.3700 seems a distant memory and those who were getting excited about 1.40 and beyond, will be cursing their luck and now talking about 1.20, such is the nature of the market.<\/p>\n

In reality 1.3000 is likely to be a key pivotal level and with the FED likely to remain on the dovish side of the tracks, talk of re-testing last summer\u2019s lows seem to me to be premature. \u00a0Expect to see intraday stops filled on any break above 1.3130 but meet fresh sellers on any upticks to 1.3200\/50 area, with a break below 1.3000 opening up 1.2910 and possibly leading to a test of 1.2840 support area, which may be deemed to offer \u201cvalue\u201d and be well defended.<\/p>\n

Buona fortuna!<\/p>\n

About the Author<\/strong><\/p>\n

Richard Wiltshire is Chief of Foreign Exchange Dealing<\/a><\/span> at ETX Capital \u2013 a spread betting provider company in London.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Richard Wiltshire \u2013 Chief of Foreign Exchange Dealing at ETX Capital Total disappointment, bordering on total disbelief, in the Italian elections saw investors run for cover and widespread cutting of major \u201crisk positions\u201d in the euro and its crosses. Despite some stabilisation this morning, where the euro has tried to stage a fight back, … <\/p>\n

Continue reading “Italian Elections Weigh Heavy on Euro”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-36476","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/36476","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=36476"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/36476\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=36476"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=36476"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=36476"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}