Mateo Renzi, the Next Domino to Fall
Skerdian Meta • 1 min read
As I quickly mentioned in the last paragraph of our November review, the first risk even for financial markets this month was going to be the Italian constitutional referendum. It was held yesterday and the polls leading to the voting day kept showing the opposition side in the lead.
Well, for the first time since the Brexit referendum and the US presidential elections the polls weren´t all useless. The side which led the "No" campaign won the referendum, meaning that the Italians voted against the constitutional changes.
To me, this is a mistake. The Italian economy has suffered much since WW2 mainly due to shifting governments every 6 months, which has made it difficult to take important reforms. This referendum was supposed to take care of just that and concentrate some more power at the central government, which would enable them to stay longer in power and implement the much-needed reforms.
Well, Italians voted no and it didn´t take long before the Italian PM Renzi held his farewell speech. He said he was going to hand his resignation forms to the President today, so I guess that´s it from the handsome guy. Renzi is an EU supporter, so Merkel will be short of a strong ally. Europe didn´t need this, especially after Brexit and Trump.
The Euro dived about 200 pips in the early hours of the morning as exit polls started coming out. We got stung by this Euro weakness in our short term EUR/CHF signal, but out long term signal remains intact and well in profit. The Euro has made a round trip, but we´ll cover the Euro behaviour and Euro pairs later on.