EUR: Encouraging developments in Italy – ING

Hopes for Italian electoral law reform has improved recently after a committee sent a draft law parliament which would see Italy shift to a proportional representation system closer to that used in Germany explains the analyst team at ING.

Key Quotes

“That is seen improving the chances of a PD government or at least decreasing the chances of a coalition of euro-sceptics taking power. EUR/$ is enjoying the soft dollar environment, but is trading way above short term rate spreads - as the market anticipates ECB tapering. Draghi disappointing the markets on Thursday and  EUR/$ crashing back to 1.10 is clearly a risk for Thursday, though we favour a buy on dips strategy under 1.12.”