Beppe Grillo, who lead Italy’s 5 Star Movement, suggested that Italy may leave the euro-zone. Grillo said his country, the euro-zone’s third largest economy should renegotiate the 2 trillion euro debt (127% of GDP).
While saying that he is a “big fan of Europeâ€, he slipped in a call for a non-binding referendum on the euro that would be held on the internet. With 26% of votes for the lower house, Grillo is listened to, and his comments could weigh on the euro.
He already said anti-euro comments in the past, but he was disregarded by the mainstream media. After the big swing in the February 24-25 elections, and potentially new elections in Italy in June, this statement is also of interest about the potential threshold for such an exit (emphasis mine):
Right now we are being crushed, not by the euro, but by our debt. When the interest payments reach €100 billion a year, we’re dead. There’s no alternative … In six months, we will no longer be able to pay pensions and the wages of public employees.
Unless Berlusconi and Bersani form a left-right government, the key to a new government is in the hands of Grillo. The Italian upper house is practically deadlocked.
EUR/USD managed to recapture the 1.30 line after bouncing at support at 1.2960. This week could see a new downfall, due to these words and due to another Italian, Mario Draghi, head of the ECB.
For technical lines and events, see the Euro to USD forecast.
