The Italian President rejected the nomination for the appointment of Paolo Savona as Minister of Economy. Savona was nominated by the far-right League and anti-establishment 5-Star Movement (M5S) government coalition. President Sergio Mattarella refused to approve the nomination of Savona because of the latter’s Eurosceptic views and statements. Political and economic analysts expressed fears over Italexit.
League leader said that the upcoming elections will not be political but a … referendum regarding Italy’s “independence”. Matteo Salvini said on Monday:
“Today Italy is not free;
it is occupied financially by Germans, French and eurocrats.”
Many analysts believe that the new elections in September will become a vote for or against EU and the common currency. This is another serious blow to the EU stability following the Greek economic crisis and Brexit. Italy is Eurozone’s third-largest economy and heavily indebted.
To conclude, this turnaround hit seriously markets and the common currency.
MARKETS – Euro hit by Italexit concerns
The US Dollar edged up against its major traded rivals apart from Yen. The safe heaven rose against the greenback, close to a 3-week peak. US dollar lost almost 0.6%. Aussie (AUD) and Kiwi (NZD) dropped. They are both sensitive to shifts in risk sentiment.
The Euro hovered near its 6 and ½ month low. The common currency recorded losses for a third consecutive day because of Italexit concerns and Europe economy downturn. Moreover, on a monthly outlook the single currency has fallen more than 4%.
The Sterling dropped again to a 6-month low against USD. However, pound remained firm trading flat against Euro.
Oil prices headed lower, as traders expect that OPEC and Russia will increase their output.
Gold remained almost unchanged as USD continues its rally due to Euro decrease over concerns on Eurozone instability.
Sources: Reuters, Euronews, CNN Money
PLEASE NOTE The information above is not investment advice.