Upcoming Cold winter and Burning Energy Prices, What will Europe do?
The EU plans to intervene in markets directly to curb rising energy costs, threatening to push the Euro area's economy into a deep recession.
Italian election: is the euro under risk?
2019-11-11 • Updated
Italian election is supposed to create volatility of the euro in the next month. The election is appointed on March 4, but talks about its destroying effect on the euro have already started.
The opponent of the government under the guidance of Paolo Gentiloni is a new-formed center-right coalition that consists of Mr. Berlusconi's party Forza Italia, Mr. Salvini’s party Lega Nord, and national-conservative political party Fratelli d'Italia.
Nowadays, there is discordance in a coalition on a key issue of participation of Italy in the European Union, that will create volatility of the euro. A leader of the Italian party Lega Nord, Matteo Salvini, is ready to leave the European Union and the Eurozone unless Brussels changes the current treatment Italy receives. He wants fewer constraints from the European Union. At the same time, other allies do not consider the exit from the EU.
The European issue is not the most important in the Italian election. The percent of Salvini’s party in the coalition even if the coalition wins, is not so big, it means that he will not be able to find support in a parliament and bring Italy to the exit. However, talks about the exit will affect the euro during the pre-election period.
Another important issue is the strength of the government. Nowadays, the Italian economy is the third-biggest economy of the Eurozone after Germany and France. It means that any changes in its policy affect not only the country itself but the Eurozone as well. The important issue is that the ECB is planning to reduce its stimulus. It can cause a burst of market volatility, that will lead to more expansive borrowing for Italian government from capital markets. Such risks can spread to other countries included in the Eurozone. If the government is weak and does not support the European Union, it will create problems for the EU and the euro as well. The EU needs the strong government that will be able to enact new laws and support its policy.
To sum up, we can say that the possibility of the Italian exit from the European Union and the Eurozone is low. However, the Italian election will affect the euro and Forex market in general. Talks about the Italian exit and dissent in the coalition will create the euro volatility, so Forex traders should be more careful during the pre-election period.
Similar
The Fed to Decide the Oil Market’s Future
The oil prices rally and world central banks’ dovish monetary policy caused by the Covid-19 pandemic were the main reasons for current inflation growth…
Pound Sterling’s Foggy Future
Weaker recoveries were seen in both the UK manufacturing and service sectors, with the latter recording the greatest loss of momentum since July.
Latest news
CAD Outlook Ahead of BoC Overnight Rate
Get ready for some suspense as the Bank of Canada faces a tough decision on whether to raise interest rates or keep them on hold. The resilient Canadian economy and the goal of curbing inflation further are at the heart of this dilemma. While some money markets and economists predict another rate hike, others believe the central bank should exercise caution and wait, hinting at a possible increase later in the summer.
Australian GDP: What to Expect
Let's take a closer look at Australia's recent economic performance. Brace yourselves for some interesting developments. The country's economy experienced its slowest growth since late 2021 in the first quarter, raising doubts about the Reserve Bank of Australia's rapid interest rate increases. Despite the bank's record-breaking 12 rate hikes in the last 13 months, the resource-rich economy only grew by a modest 0.2% in the quarter, falling short of economists' expectations.
Gold and the Majors ahead of the NFP
Let's dive into the latest developments shaping the global economic landscape. Good news first: the threat of an unprecedented US debt crisis has receded, as US lawmakers passed a bill to raise the debt ceiling and avoid a catastrophic default. Phew! But don't pop the champagne just yet, because storm clouds are still looming. High inflation, rising interest rates, and sluggish growth are challenges that have yet to disappear.
