The Italian government is set to release its Economic and Financial Document (a precursor to the budget) later today
With so much going on in markets right now, it wouldn't be surprising if traders decide to put the FOMC meeting decision yesterday in their back pockets for the time being. There's still the US-China trade rhetoric, Brexit risks, NAFTA deadline fast approaching, emerging market woes, Trump's battle against Iran, Russia, North Korea, and rising global trade tensions among other things.
And let's not forget, there's still the risk of the 2019 Italian budget deficit. Today, the government will be unveiling its economic document which will include financial targets that will make up the budget.
Yesterday, finance minister Tria offered a little glimpse of what to expect as he said the budget will include Di Maio's plan of introducing citizens' income. He was tight-lipped about the scale of it and how it will be financed but I reckon this is more of a compromise more than anything else.
Tria has been pushing for a deficit of 1.5% to 1.8% but Di Maio's fiscal plans will already run up to a 1.5% deficit in itself, so that begs the question how will all of this fit in to equate to a deficit of under 2%.
That's the threshold level that markets are looking at right now. The other key dates moving forward for Italy is 15 and 20 October. The former being when Italy submits their draft budget to the European Commission while the latter is when the actual measures have to be approved by the Italian cabinet.
There hasn't been much impact on the euro in all of this as nothing has really firmed up just yet. The market moves have largely been isolated to Italian assets only. But if things do turn sour I don't expect the euro to be unscathed from the risks associated to Italy's debt situation.