EUR: Looking through Italian politics - ING

Analysts at ING suggest that the outcome of the Italian elections doesn't alter their bullish EUR/USD view as the hung parliament is not enough to offset the positive Eurozone economy cyclical story and the ECB steps towards the policy normalisation

Key Quotes

“The negative EUR reaction to the stalemate result of the Italian parliamentary elections over the weekend has so far been rather muted.”

“In our view, this is not surprising given

(a) the general market ex-ante expectations of a hung Italian Parliament, which in turn reduced the negative surprise effect; 

(b) the EUR/USD sensitivity to Eurozone political uncertainty was declining materially since 2015; 

(c) the SPD members agreement on the German Grand collation which in part offsets the effect of the Italian election result on EUR.”