The European markets seem to be enjoying the news that President Napolitano was elected by the Italian Parliament for a second term; it was the first time in Italian kistory that a president was asked to serve a second time. Expectations are high for Napolitano to quickly form a new government under a new prime minister, possibly even in the next week. If a new prime minister is chosen who intends to maintain the economic reforms enacted by his predecessor, the markets would likely view such events as Euro positive.
Italian 2-year note yields dropped to a record low of 1.267% in today’s trading. The Italian benchmark 10-year bond yield is trading 12.7 basis points lower to 4.08%. Meanwhile, European equity indexes are trading higher at the time of this writing, and the Euro opened 25 points higher than at Friday’s close against the US Dollar.
The economic calendar was light during the European session. The Euro-zone government debt to GDP ratio for 2012 was reported at 90.6%, up from 87.3% in 2011. The release had little effect on Euro trading.
The Wall Street Journal reported that Economy Minister Guindos said the Spanish economy will shrink between 1% to 1.5% in 2013, but he predicted slight growth in 2014. The Bundesbank casted doubt on a German economic recovery in Q1, but said an uptrend should continue in Q2.
EUR/USD is trading around 1.3040 at the time of this writing, and may see support by the key 1.3000 level. A 7-week high at 1.30201 may now provide resistance.
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EURUSD Daily: April 22, 2013
Chart created by Benjamin Spier using Marketscope 2.0
--- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to firstname.lastname@example.org .