The political euphoria from a failed anti-establishment government is facing a reality check
The reversal of Italian assets is shaping up to be a symbolic move for the euro, as warned earlier. EUR/USD is now down to 1.1665, having touched 1.1661 moments ago. Pretty much all the feel-good factor arising from Five Star and Lega abandoning plans to form a government has faded by now.
Investors are now having to come to terms that another fresh election is coming and with no changes to the electoral law, we may very well see the same two parties looking to form a government once again.
Italian president Mattarella is looking to form a technocrat government, but is likely to fail to gather enough votes and that will pave the way for fresh elections to take place. The idea that Five Star and Lega will be at the forefront again isn't very welcoming, with Italian assets selling off and Salvini pushing forward with the notion that he wants euroskeptic Savona to be a part of the ruling government.
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