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Italian Referendum and a case for parity in EUR/USD
The market is prepared for a ‘no vote’ victory. Take a look at the German 2-year yield, it is trading -0.738%, i.e. at least 33 basis points lower than the ECB deposit rate of -0.30%. The recent low stands at -0.769%. Note, that the 2-year yield has declined at a time when the global bond yields are on rampage… led by the Trump Bump and the treasury yields. This clearly states that a ‘no vote’ victory has been priced-in. However, what’s not priced-in is an eventual threat of ‘Italeave’/’Italexit’. Moreover, a no vote victory in Italy would also force markets to begin pricing-in the rise and ... (full story)
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