Euro flat ahead of Italian vote

The euro is broadly unchanged versus the US dollar, ahead of a vote of confidence for the Italian prime minister.

The strength of the Italian coalition has been called into question recently, as some senior members of the People of Freedom party urge other members to defy Silvio Berlusconi and back Enrico Letta.

With the third largest economy in the eurozone, Italy’s continued political instability is hampering the nation’s ability to reform its economy. If the coalition survives the vote of confidence, EUR/USD could trade higher.

The European Central Bank is due to make its interest-rate decision at 12.45pm (London time), with the consensus that rates will be left unchanged at 0.5%. A press conference follows the announcement at 1.30pm (London time), where traders will listen for any clues as to the ECB’s future intentions.

The continued partial shutdown of non-essential state jobs in the US is weighing on the dollar, though the shutdown is unlikely to have an impact the US' credit rating. However, the situation may put more pressure on debt ceiling talks which will come to a head in mid-October.

Spot FX EUR/USD (DFB) chart

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.