We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Mixed
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Commodities Update: As of 18:00, these are your best and worst performers based on the London trading schedule: Gold: 0.34% Oil - US Crude: -0.27% Silver: -0.94% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/zvDaWrFDE9
  • ECB's Villeroy says insurer dividend policy is being watched closely - BBG
  • $USDCAD looks like it could hold steady to higher as long as it maintains 13920. Get your USD/CAD market update from @PaulRobinsonFX here: https://t.co/aBbeGA1Pcq https://t.co/GyvdjNdBVb
  • RT @johnauthers: The crisis is not easing for emerging markets. JPMorgan's EM FX index is at a new low since inception, down more than 12%…
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.45%, while traders in US 500 are at opposite extremes with 66.92%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/70Gx211KkT
  • RT @staunovo: Russia to join OPEC+ conference call planned for April 6: Novak #oott https://t.co/393P1fxKkM
  • RT @LiveSquawk: BoC Announces Activation Of The Contingent Term Repo Facility https://t.co/Mbie3gOqxJ
  • Bank of Canada activates contingent term repo facility starting April 6th $USDCAD
  • RT @BobOnMarkets: Morgan Stanley: We forecast the Case-Shiller US National Home Price Index to fall to -5.3% YoY by the end of this year
  • Indices Update: As of 18:00, these are your best and worst performers based on the London trading schedule: Germany 30: -0.60% France 40: -0.65% Wall Street: -2.27% US 500: -2.37% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/Aq59cnE206
Euro at Risk: How the EU Might Punish Italy

Euro at Risk: How the EU Might Punish Italy

2018-11-21 02:00:00
Dimitri Zabelin, Analyst
Share:

TALKING POINTS – Euro, Italy, eu, budget

  • Rome and Brussels collision over budget is intensifying
  • Yield spread between German and Italian bonds widening
  • Unprecedented stalemate likely to cause flight from Euro

Build confidence in your Euro trading strategy with our free guide!

The war of words between Rome and Brussels is intensifying with EU policymakers heading into unchartered waters. After two budget submissions were rejected, the EU Commission has decided to meet on Wednesday Nov. 21st to discuss the possibility of opening up a case for the Excessive Deficit Procedure (EDP).

The punishments include a fine of 0.2 percent of GDP. Normally, this process would only begin in April of 2019. However, the Commission may be able to expedite the process and begin imposing fines as early as this month. The punishment would take the form of a non-interest bearing deposit. This sanction could only be avoided if more than half of all Eurozone finance ministers reject it within 10 days of adoption.

If the deposit is made, the Italian government is given 3-6 months to implement the necessary reforms. If the proper changes are not made, the deposit turns into a fine. If the government refuses to pay the initial deposit and subsequent fines, the issue would likely be taken up to the European Court of Justice.

Another punitive measure may also entail freezing Italy’s access to funds such as the European Stability Mechanism and the European Structural and Investment Fund. They may also be denied access to the Outright Monetary Transaction, a process whereby the ECB buys the bonds issued by member states from secondary sovereign bond markets (although this has not been used in practice so far).

Uncertainty about how policymakers will navigate these uncharted waters is likely to widen the spread between German and Italian bond yields further, implying increased reluctance to lend to Rome versus Berlin. It may also encourage capital to flow out of the Euro until clearer bearings may be established, sending the single currency broadly lower.

EUR/USD Decline, German and Italian Yield Spread Widening

Euro vs US Dollar, Italian vs German Bond Yields

EURO TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitri on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.