TALKING POINTS – ITALY, EURO, SWISS FRANC, CANADIAN DOLLAR, CRUDE OIL
- Euro[1] soars as Italy’s Mattarella vetoes eurosceptic cabinet nominee
- Swiss Franc[2] retreats, Aussie and NZ Dollars rise as sentiment firms
- Canadian Dollar[3] sinks as crude oil[4] prices continue Friday’s selloff
The Euro traded sharply higher to start the week after Italian President Sergio Mattarella vetoed the nomination of eurosceptic economist Paolo Savona for post of Economy Minister in the fledging coalition government of the far-right League and anti-establishment Five Star Movement.Prime Minister-designate Giuseppe Conte swiftly abandoned administration-building efforts, which may open the door for a technocrat caretaker cabinet to take the reins until a new election is held in autumn.
The news signaled that the ascendancy of an anti-Euro government in the currency bloc’s third-largest economy will not go unchallenged, with a simmering crisis now potentially defused (at least in the immediate term). The Swiss Franc duly fell, unwinding some of gains scored on the back of Euro area turmoil in recent weeks. Broader risk sentiment also brightened, sending the Australian and New Zealand Dollars upward while the Yen and the US Dollar[5] lost ground.
The Canadian Dollar suffered as crude oil prices continued to plunge[6] following Friday’s brutal selloff. Oil is one of Canada’s top exports, which frequently leads investors to interpret large moves in the commodity’s price as having knock-on effects on the country’s growth prospects. That is extended to shaping expectations for inflation and thus monetary policy, which understandably impacts the currency. Follow-through may
