Uncertainty In Italy With Election Split, Causes Chaos In Mark

Silvio Berlusconi Italy’s previous Prime Minister along with his conservative party is all set to be reinstated into Government after a surprising result from Italian elections. While the Democratic Party won most votes in the lower house by a small percentage it’s unlikely that they will be able to form a majority which means the country will have to go back to the polls. If on the other hand Silvio Berlusconi takes the senate majority then speculation will be rife as to his measures to pull back on the austerity plans that the current PM, Mario Mont has implemented. This will fire up instability in the EuroZone .This uncertainty has affected all of the major markets. The EUR has fallen to 7-week lows against the USD. US Stocks fell yesterday on the back of this uncertainty, their worst day in almost 4 months. This had an effect on the oil which is closely linked to the performance of US Stocks.

Stocks

Asia
Following on from the US stocks slump the Asian Stocks also saw a decline in Asian trading this morning. Japans Nikkei 225 dropped 1.72per cent. The CEO of Nissan Motor Carlos Ghosn commented that the USDJPY is still a long way off a fair value. In the past Ghosn had remarked that a fair value for this pair would be 100 as its neutral price. The Hang Seng in Hong Kong slid by 0.77 per cent and the Shanghai Composite gained 0.35per cent. Australian S&P/ASX200 fell by 0.6per cent after the Australian Reserve Bank Governor said that the local currency would have to gain from existing levels before the Central Bank would intervene. The AUS has been the strongest performing currency from a developed country against the USD since 2008.

US
At the close of the US Trading yesterday Dow Jones closed down 1.55per cent, S&P 500 finished 1.83per cent lower and the NASDAQ down by 1.44per cent. Meanwhile investors wait in anticipation for Ben Bernanke’s semiannual testimony on fiscal policy to Senate Banking Committee later today and another testimony to the House Financial Service Committee tomorrow. It is supposed that he will play down worries that the US Central Banks stimulus policy will drive up the rate of inflation.

Forex
USD/JPY held its pace today rallying after yesterday’s losses caused by worries surrounding the Italian elections. The USD/JPY touched 91.41, the session low during afternoon Asian trading. The pair then reached 91.94 a rise of 0.13per cent. The AUD/USD gained 0.22per cent this morning to climb to 1.0280 after comments from An Aussie Central Banker that the AUD would need to gain before the Central Bank would consider intervention. The AUD/NZD crept up by 0.16per cent to 1.2431. The EUR hit 7 week lows against the USD hitting 1.3018 in Asian trading, the lowest level for the pair since Jan 4.

Commodities
Mixed overnight trading for the commodities. Gold becomes the safe haven ahead of Ben Bernanke’s testimony later today which will give clues as to further plans for implementing stimulus to the US economy. Gold futures met a 1-week high this morning and were traded at $1597.10a troy ounce which is an increase of 0.65oer cent from yesterday.

Today’s Outlook
Traders will keep an eye out for Ben Bernanke’s testimony today with a hint that he will downplay inflationary fallback from further stimulus. Keep an eye out for new home sales today which could give an idea as to the state of the US economy. Bank of England Governor Mervyn King also to speak today. Expect a volatile trading day which is beneficial for binary options traders.