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2 Apr 2013
Forex Flash: Looking past Cyprus, Italian politics are next - BBH
FXstreet.com (Barcelona) - Brown Brothers Harriman analysts believe that when investors have managed to look beyond Cyprus, Italian politics seem to be the next worry on the horizon.
They feel that there are increasingly worrisome signs in the real economy, as well as in the financial sector too. They write, “The March manufacturing PMI (44.5) is the lowest since last August and the forward looking orders slumped since last May. Output and employment are at seven-month lows. The general reduction of Target2 imbalances continued into February.” However, the notable exception was in Italy where liabilities rose by EUR 28bln, the largest increase in a year and reversing the improvement seen over the past six months. In addition, unlike most other countries central banks, the Bank of Italy increased its borrowing from the ECB for the first time since last July. They write, “Without putting too fine of a point on it, these figures point to increasing financial strains in Italy.”
They feel that there are increasingly worrisome signs in the real economy, as well as in the financial sector too. They write, “The March manufacturing PMI (44.5) is the lowest since last August and the forward looking orders slumped since last May. Output and employment are at seven-month lows. The general reduction of Target2 imbalances continued into February.” However, the notable exception was in Italy where liabilities rose by EUR 28bln, the largest increase in a year and reversing the improvement seen over the past six months. In addition, unlike most other countries central banks, the Bank of Italy increased its borrowing from the ECB for the first time since last July. They write, “Without putting too fine of a point on it, these figures point to increasing financial strains in Italy.”