EURO : Next – big – threat ? Berlusconi is back !

Talks of parallel currency gets bigger again in Italy after last weekend Berlusconi interview.

Following Citi , more than 2/3 of italian voters would support anti EUR parties.

The 3 right & centre rights parties will finalise a common program in september likely including parallel currency project.

Risk of Italy (even if low) going this way totally underestimated by FOREX markets but Italian Bonds have started to react negatively  with Bund/BTP spread  up 20 bps in the last week.

 

See more details in  FT’ link here below :

https://ftalphaville.ft.com/2017/08/21/2192571/parallel-currency-talk-gains-ground-in-italy/?ft_site=falcon&desktop=true

 

Italy + ECB obviously not wanting to see EURO above 1,20 + ECB potential tapering discussion in september already in EUR price + more dovish Fed priced as well = EURO/USD  to correct from current 1,18 to 1,20 range is becoming more and more likely.


 

 

Eurostoxx 50 breaking higher …

In the aftermath of Italian referendum and ECB decision to extend QE until end of 2017, Eurostoxx50 has exceeded a cluster of resistances in the 3100-3150 area and made a new high for 2016.

The upside is open as long as profit taking in the next days does not drive the index back below 3100 on a closing basis and so cause a fake break up.

Many analysts do consider european stocks as not overly expensive and that they will profit from a weakening EURO . One has also to keep in mind that current levels of Eurostoxx50 is 17% off its April 2015 high & respectively 30% / 41% off 2007 / 2000 Highs ; Right , the european financial and economic landscape was much different at that time !!

estoxx50-131216

Long term Eurostoxx50 chart : In 2000 when the european index was at the top , EUR/USD was quoting around 0,90, at the bottom in 2009 , in the 1,30 -1,50 range … Where the EUR goes , …

estoxx50-w-long-term131216

Infrastructure : THE Investment Theme for 2017 ?