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La Dolce Vita

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The euro rallied after the Italian referendum result, which should not necessarily be that surprising. The Eurozone is a current account surplus bloc, meaning that the price of the euro is dictated by Europeans' willingness to sell their currency.
  • Europeans can be supposed to have a better understanding of the nuances of their political situation, and therefore perhaps less inclined to panic into selling just because another Italian government has lost office. No European selling, no euro sell-off.
  • Eurozone GDP is due out (a revised number, but markets never pay as much attention to revisions as they should). The growth picture should be perfectly reasonable. One might question why the ECB is likely to offer additional accommodation at their meeting this week at a time of reasonable economic growth and rising inflation.
  • The UK Supreme Court starts its hearing into whether the UK government needs parliamentary approval to exit the EU; the parliament will grant such approval, but the question is whether conditions are attached.
  • US labor cost data (which is important for inflation) and durable goods data are due.