EURUSD Rattled by Italian Budget Fears and Fin Min Resignation Worry
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EURUSD Points Lower as Italian Budget Worries Surface
The Italian budget, due to be announced today, may well be delayed as both ruling parties push for a larger budget deficit, putting Italian Finance Minister Giovanni Tria in an uncomfortable situation. Tria has promised to keep spending under control, and within EU rules, while making money available to the ruling parties to keep their election promises. Both the Five Star and League parties are said to be pushing for a 2.4% budget deficit against Tria’s 2% limit, and talk is circulating that the Finance Minister may resign if his debt reduction plans are overuled.
Italian government bond yields traded higher Thursday with the 10-year nearing 3%. A breakdown in the Italian budget would put pressure on rating’s agencies to further cut their ratings, increasing borrowing the country’s borrowing costs.
Wednesday’s FOMC announcement and press conference passed without too much drama with the anticipated hike fully priced into the market. The Fed dot plot didn’t give any new clues going forward with one more interest hike expected in December this year, three more in 2019 and one in 2020. Fed chair Powell did remove ‘accommodative’ from his policy description, yet the overall take from the press conference was neither hawkish or dovish.
EURUSD Four Hour Price Chart (August 12 – September 27, 2018)
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