Voting has ended in Italy and exit polls show that the PD led by Bersani wins 34.5% of votes. Berlusconi comes in second with 29%, Grillo third with 19% and Monti only with 9.5%. If this is indeed the result, it is a positive outcome, but is one exit poll for the elections in the lower house of parliament. It is also important to note that exit polls are not always that accurate and that the full results will be known only tomorrow.
EUR/USD was rising towards the release of the exit polls on hopes that the center-left PD will win a convincing majority. EUR/USD is sliding from the highs and is now at 1.3286. It currently seems as a “buy the rumor, sell the fact” reaction. . First senate forecasts based on actual results expected around 15:30 GMT.
Big update: Fresh data actually shows that both Berlusconi and Grillo had a much better outcome. Italy’s elections could end in a hung parliament – EUR/USD dives. The drama isn’t over.
Update 2: EUR/USD extends its losses and falls below 1.31. What a roller coaster!
Update 3: Italian Senate Deadlocked – Grillo can trigger new elections
Update 4: USD/JPY falls on safe have comeback, so, EUR/JPY crashes 600 pips.
A coalition of Bersani’s PD and current PM Mario Monti’s center party is a favorable result for the euro. A victory for Berlusconi or a big achievement for Beppe Grillo’s 5 Star Movement would be an upset for the euro.
Polls:
- Sky TV: PD 34.5%, Berlusconi 29%, Grillo 19%, Monti 9.5%.
- RAI phone poll: center-left coalition to get 35%-37%, Berlusconi coalition 29%-31%, Grillo 19%-21%, Monti 8%-10%.
- Another poll shows an even bigger victory for Bersani, with 37%.
The euro-positive:
- Bersani seems to be the clear winner of the lower house, according to all the polls.
- Bersluconis is unlikely to be prime minister
- Grillo came only third
- Markets: Italian stocks are up, bond yields are down.
The euro-negative:
- Lombardy is too close to call. It is the key to a majority in the upper house.
- Monti had a poor outcome. This could make a less stable less pro-EU coalition.
- Italian voting for Berslusconi sometimes prefer not to the admit it. In the past, Berlusconi’s actual outcome was better than in exit polls.
- A positive result was already priced into EUR/USD, and it is selling the fact.
What’s next?
- First senate forecasts based on actual results expected around 15:30 GMT.
- Full results expected only during Tuesday
- A victory for Bersani in Lombardy could boost the euro.
- No majority in the upper house for Bersani + Monti could hurt the euro.
Lombardy is the key
Lombardy is in the north and is home to Milan – Italy’s second largest city, an industrial hub and the home region of Silvio Berlusconi. Polls shows a a “too close to call” race in this region.
Berlusconi also owns AC Milan, one of the best football teams in the world. AC Milan recently signed Mario Balotelli, an excellent, yet controversial player. The move was seen by many as part of Berslusconi’s campaign. Yes, football (soccer in the US), is also part of the political game.
EUR/USD
EUR/USD is still trading cautiously around 1.3290. The pair already reached a high of 1.3319 towards the exit polls, and lost some ground afterwards.
Resistance appears at 1.3350, followed by 1.34, which is an important line. 1.3486 is even more important. Support is now at 1.3255, which held well on Friday, but was broken towards the end of the voting, and then at 1.3170, which is the key line on the downside.
For more technical analysis, see the EURUSD forecast.
The weakness of Monti could endanger the probability of a coalition between the two.
If these results are correct, then Beppe Grillo did not manage to enjoy a big swing on election day. His achievement, 19-21% of the votes, is certainly impressive, but he came out only third and not second. However, Berlusconi seems to have taken many votes from the Monti camp.
Regarding Monti, it seems that he received less votes than the polls had suggested. This could be seen as a desire for some compassion in austerity.
For more, see the Italian Elections preview – with a beautiful infographic.
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