Analysts at Commerzbank offer their view on the Euro in the coming months, in the wake of the Italian political risks.
Key Quotes:
“There is a lot to suggest that the EUR weakness is coming to an end unless Rome produces new disturbing signals.
The bond market still sees an increased risk in the Italian government’s fiscal policy.
However, what is relevant for the FX market is that this risk premium has not widened recently, but is moving sideways.
Not sure whether that is fundamentally justified and in particular whether this properly reflects the political risks emanating from Italy. The only thing I do know is that: as long as Italian government bonds remain in this state the subject of “Italy risk” will slowly become irrelevant for the EUR exchange rates.”
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