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EUR: Italian referendum and Renzi resignation have already been digested

By Ricky Bean December 6th, 2016

Sunday’s referendum in Italy has been seemingly ignored by euro markets. Despite falling in the aftermath of the vote to reject constitutional reform, the euro actually closed yesterday’s trading session higher than before voting closed.

The single currency made significant gains against the pound and, even more so, against the US dollar. This is clearly a sign that markets had already priced in the result (unlike with Brexit or Trump’s victory).

Looking at data, Germany’s services PMI came in better than expected, while France and the bloc posted worse-than-expected results.

Today we have German factory orders and European ECOFIN meeting notes.

However, a lack of data doesn’t necessarily mean a lack of activity. In the run-up to the referendum, Italian banks were under pressure to find vast amounts of capital, and Monte Paschi di Sienna (Italy’s third largest lender) is still riddled with non-performing loans and in need of a huge (about €5 billion) amount of additional capital. It seems the uncertainty in the Eurozone has only just begun.