The Euro bounced back yesterday after the initial sell off, as the currency adjusted to the crushing defeat and resignation of its Prime Minister Matteo Renzi. The Euro fell to a 20-month low against the US Dollar. It then depreciated 1% against the Pound as markets digested the news, before retracing back to the pre-event levels against the Pound. Renzi won a little over 40% of the vote, a far worse result than polls had predicted and his decision to quit has dealt another fatal blow to the European Union.
Yesterday’s economic docket was dominated by the US and UK’s tertiary sectors as the Services PMI’s were released. UK Services PMI rose to 55.2, up from the previous month and the highest reading since January. Employment growth in the service sector hit the fastest pace since April, helping to contribute to the bullish figure. Across the pond, the US released the ISM Non-manufacturing PMI. The reading continued the run of good form from the States, exceeding economists’ consensus once again at 57.2, a 13 month high. The bullish reading gave the Greenback a boost yesterday afternoon.
It will be a relatively quiet economic day today with only one notable piece of data scheduled, the ECOFIN meetings. The ECOFIN meetings are attended by Finance Ministers from EU states and with the recent Italian referendum results, anything said regarding Italy will likely spark further volatility for the Euro.