Italian PM Draghi has tendered his resignation, according to a statement; President Matarella has asked Draghi to carry on as a caretaker government
Reaction details (09:14)
- In wake of this, EUR/USD dipped to an incremental session low while BTP Sep'22 have come under further pressure, but remain off worst levels which have seen losses in excess of 230ticks posted thus far.
- Subsequently, the BTP pressure continued and moved to within 10ticks of the earlier 120.24 low; action that re-widened the BTP-Bund yield spread to over 240bp.
Analysis details (09:11)
- Mattarella appears to be attempting to appoint another technocrat/caretaker leader. However, it is currently unclear whether this would be until early elections (late September/early October) could take place or until next year when elections are already scheduled to occur no later than June 2023. Additionally, Italy is approaching a busy period where budgetary matters are typically conducted.
- However, it is currently unclear as to whether Draghi's re-appointment as a technocrat/caretaker will be possible for any period other than to allow snap elections to occur, due to the conflicting views among parties and the strong desire from some, particularly the Centre-Right, for snap elections.
- In the event of snap elections, currently, polling has Brothers of Italy (FdI) topping the pile on 23.2% followed by the Democratic Party (PD) on 23%. Such a result, if polls are indicative, would mark a significant changing of the political landscape vs 2018, where the dominant party was M5S with 32.7% of the Deputies Chamber vs 9.7% (-23pp) under current polling. Amidst this, the Centre-Right coalition stands to benefit the most and would likely secure power, as while the League (-2.9pp) and Forza (-3.7pp) have been fairly steady, Brothers of Italy (+18.8pp) has seen a significant surge in support at the expense of M5S (-23pp).
- If snap elections were to occur, September 25th and October 2nd have been touted as the most likely dates.
21 Jul 2022 - 09:07- ForexBank Speaker- Source: Newswires
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