CITI bank note EUR has made a sharp move.......>

EURO: CITI bank note EUR has made a sharp move lower in early London trading,

after doing very little throughout a quiet Asia session. EURUSD has dropped to

1.1192, EURGBP is down to 0.92808 and EURJPY is at 118.04. Curiously, the

BTP/Bund spread has actually narrowed to 231bps.

Most of the EUR selling is being linked to the renascent threat of Italian

politics. As a reminder, there is a crunch meeting scheduled for 16:00 BST today

between party leaders, in a last ditch attempt to save the fragile coalition and

avoid a Confidence Vote against PM Conte.

As mentioned previously, the pathway to a snap election is not straightforward

and so this has limited follow-through for EUR assets (for now). Importantly, a

confidence vote may not necessarily lead to early elections and the earliest a

snap election could be called is around three months away.