Euro Stagnation Continues Despite Equity Rally
European equity markets continue to rise for another day, reflecting three straight days of climbing S&P index levels in the United States. The exact source of the European rally today is tough to pinpoint, but the progress in the gridlocked Italian politics may be a source of market optimism.
Expectations are high for Italian President Napolitano to announce a nominee for prime minister today. The Repubblica reported that Napolitano will nominate Democratic Party’s Lett, but some speculators are also looking towards the 38-year old mayor of Florence, Matteo Renzi. Again, Euro investors are looking for a premier who won’t undo the structural reforms put in place by outgoing PM Monti.
On the positivity, Italy sold 2014 zero coupon bonds today for a record low 1.167%. However, the Euro has not enjoyed a rally like the region’s equities. EUR/USD is only slightly higher than the open today at 1.3002, but the pair managed to erase an earlier decline to 1.2953 following disappointing German IFO survey results. EUR/USD has yet to close higher than the open in this week’s trading.
The Bank of England announced today that it will extend the Funding for Lending Scheme by a year, and Governor King said in a note that FLS is a valuable measure. King further mentioned the risk of uncertainty in the Euro-zone.
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EURUSD Daily: April 24, 2013
Chart created by Benjamin Spier using Marketscope 2.0
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