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Italy: Political drama drags on – Danske Bank

The Italian political drama drags on and although market sentiment recovered somewhat from the sell-off on Tuesday, the political outlook remains unclear, following conflicting comments from Five Star and League politicians yesterday, notes the research team at Danske Bank.

Key Quotes

“The option for a technocratic government seems to be on hold for now, after PM-designate Cottarelli is awaiting the possibility of a political government between Five Star/League/Forza Italia and other political parties emerging. A renewed Five Star/League push to form a government remains an option, but both parties have also repeated their call for new elections, raising the threshold for a compromise on any deal. We expect the Italy theme to stay with us in the next weeks and months and market sentiment to remain very volatile in the near term.”

Sweden: Slowdown evidence accumulates – Nordea Markets

Due to SEK weakness and energy price, the Riksbank will have inflation tailwinds in 2018 as GDP growth, on the other hand, looks to be turning into a
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EUR/USD loses the grip, back below 1.1700

After testing fresh tops in the 1.1720 region earlier in the day, EUR/USD met some selling orders and is now returning to the 1.1680/75 band. EUR/USD
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