The political uncertainty in Greece has eased as a new technocratic government was sworn in on Friday. The new government is led by former ECB VP Lucas Papademos and Venizelos held on to his post as Finance Minister and Deputy PM. Government officials said the nation's first priority is to secure the payment of the sixth tranche of aid which provided clarity and reduced fears of an imminent default.In Italy, the upper chamber approved austerity measures and the lower-house is scheduled to vote tomorrow in Rome. The developments point towards new leadership in Italy as Prime Minister Silvio Berlusconi pledged to step down after the approval of the debt-reduction measures. Expectations are for Italy to
follow Greece in establishing a technocratic government with Mario Monti as the likely head.While recent developments have seen risk sentiment stabilize and the EUR advance heading into the weekend, it is unlikely the rally will be sustained as structural challenges and lower growth outlooks pose downside risks to sentiment.It is also of note that in the coming weeks, U.S. politics may come into focus with the deadline for the super committee approaching. The joint select committee is tasked with issuing a plan to slash the deficit about $1.5 trillion over a 10-year period by Nov. 23.
follow Greece in establishing a technocratic government with Mario Monti as the likely head.While recent developments have seen risk sentiment stabilize and the EUR advance heading into the weekend, it is unlikely the rally will be sustained as structural challenges and lower growth outlooks pose downside risks to sentiment.It is also of note that in the coming weeks, U.S. politics may come into focus with the deadline for the super committee approaching. The joint select committee is tasked with issuing a plan to slash the deficit about $1.5 trillion over a 10-year period by Nov. 23.
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