A relief rally on the EURO is underway as Italian President Mattarella rejected PM-designate Conte’s candidate for finance minister – Paolo Savona, a die-hard Eurosceptic. But given how high emotions run in Italian politics this is far from over but indeed will be viewed as a vote of confidence for the EURO and temper Italy contagion fears. Concerns are now rising that the defunct government will push for a fresh round of elections, and the possibility of an un-elected technocratic government could see support swell for the anti-establishment coalition that barely missed a popular vote when counted together. It’s a holiday-thinned light trading session today for the traders, as the UK and US observe the Spring Day and Memorial Day holiday respectively. Hence, markets will be left at the mercy of illiquid trades and developments surrounding the Italian politics while any latest updates on the US – North Korea Summit could also have a significant bearing on the US dollar trades, as the main focus remains on this Friday’s US non-farm payrolls release for fresh outlook on the US interest rates.
In the meantime, we have a second-liner Swiss employment data due for release today at 0715 GMT, which will offer some incentives to the investors. Also, the oil-price action and risk trends will play a key role heading into a quiet trading session.