Investors focus on Italy’s referendum

Last week ended with the single currency falling to a two week low against the Greenback, which is a decline of around 4%. This uncertainty around the Euro is giving volatile swings as investors look to best position themselves before Italy’s 4th December constitutional vote, with a ‘no’ vote likely to send ripples across the Eurozone. As previously seen with the Brexit and the election of Trump, the voters have gone against the establishment though the polls as the run up have shown different results to the eventual outcome. If Italy does not see the ‘yes’ vote win, Prime Minister Matteo Renzi will not be able to overhaul the current constitution, in which he will aim to speed up law making and produce a more stable government. Matteo Renzi has also pledged to resign if the ‘no’ vote wins as the referendum would show a lack of confidence in his ability to pull Italy’s economy out of the doldrums. As it stands the ‘no’ vote in the latest polls is slightly ahead with 20% of voters undecided. The outcome on the 4th of December could set the tone for the rest of Europe for 2017 and for the single currency.

Monday 

ECB president, Mario Draghi is the only event to note today as he testifies this afternoon on the European Central Bank’s annual report in Strasbourg. Again, markets will look for comments on whether the ECB are likely to take action in response to the current political impact that could be seen from Italy and the ever topical Brexit.  

Tuesday 

The UK Public sector borrowing is released and although not a market mover, it will be scrutinised as the government still looks to invoke article 50 by early next year. From the US, existing home sales is the only data to look for. Although it is expected to remain in line with last month’s 5.47m figure.

  • UK Public Net borrowing
  • US Existing Home Sales

Wednesday

Manufacturing and Services PMI’s hit the wires early in the morning from France and Germany, before the main Euro PMI’s for these sectors are posted. With France and Germany both likely to show slight increases, it is also expected to show through in the Eurozone’s composite reading due to around 53.2 and remaining in expansionary territory. The UK then provide and set out the economic outlook and budget for the coming year in the Autumn Forecast Statement. Sterling could see some volatility as this reflects the government’s outlook and financial objectives. Later in the afternoon, the US release durable goods orders for the month, which is anticipated to bounce to a bullish 1.2%. The FOMC minutes are also released where markets will look for further clues on whether we will see a December hike.

  • Euro Flash Manufacturing PMI
  • Euro Flash Services PMI
  • UK Autumn Forecast Statement
  • US FOMC Meeting minutes

Thursday 

On Thursday, the economic data slows considerably. German Ifo business climate survey is the only data release to note, with no dramatic change expected so we could see muted movements in the markets.

  • German Ifo Business Climate

Friday

The second reading of the UK’s Q3 GDP figure is set to see it remain at 0.5%, with anything above or below this is likely to provide volatility for the Pound.

  • UK Q3 GDP second reading