Italian Woes Resurface
The Eurozone’s political scene was thrown into uncertainty over the weekend as Italian Prime Minister Mario Monti announced that he would resign as soon as the budget was passed. This sets the stage for elections in mid-Q1 2013, several weeks earlier than anticipated. Monti’s succession was always going to be a potential stumbling block for the Eurozone’s crisis resolution, and the credibility of Italy’s reforms will undoubtedly face closer scrutiny in the coming months, and yields will react accordingly. So far the euro has not reacted aggressively, as Friday’s strong US jobs numbers may have played as much a role as developments in Italy in driving a stronger dollar. Ahead today, the data flow is limited but no doubt newswires will be active in gauging the Eurozone’s reaction, as well as news on the Fiscal cliff. On the data side, Swedish industrial production and Germany trade figures are due. Overnight EURUSD traded 1.2880~1.2916 and USDJPY 82.38~82.63.
Click here to read the full report: UBS Morning Adviser Europe
UBS Investment Bank