Italian Politics Push Safe Havens Higher

August 9, 2019 Share Print 0

Trade war worries and the prospect of early elections in Italy and Britain hit European markets on Friday, while the week’s search for safety left gold on course for its best week in three years, Japan’s yen near an eight-month high and bonds surging.

A turbulent week dominated by a symbolic drop in China’s currency was not finished yet. A report that Washington was delaying a decision about allowing some trade between U.S. companies and Huawei again spooked Asia.

Europe was then led lower by a 2.4% slump in Italian stocks after Matteo Salvini, the leader of one of the country’s ruling parties, the League, pulled his support for the governing coalition on Thursday.

Snap elections have been likely for months, but markets were jarred when Salvini – who’s publicly insisted the government would last its full five years – pushed for a new poll.

Investors dumped Italian government debt, pushing yields — which move inversely to prices — on Rome’s 10-year bonds up 26 basis points to 1.8%, the biggest daily increase in over a year.

via Reuters

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Alfonso Esparza

Senior Currency Analyst at Market Pulse

Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.