EUR/USD remains volatile below 1.17 with markets taking little comfort from the Italian M5S and La Ligua parties having been able to form a government which has been approved by Italian President Mattarella. There are still question marks as to whether this populist and anti-immigrant coalition will ultimately seek to take Italy out of the Eurozone.
Moreover Mariano Rajoy has been forced out as Spain’s Prime Minister after a no-confidence vote in Parliament and the leader of the main opposition Spanish Socialist Workers’ Party, Pedro Sanchez, now automatically becomes prime minister. Finally the US announced yesterday that it would introduce tariffs on imports of steel and aluminium from the European Union, raising the prospect of the EU retaliating with protectionist measures of its own and a full-blown trade war.
