Italy government signs off on 55 billion-euro stimulus package

Following the clashes over a plan to grant temporary status to illegal immigrants along with concerns as to where find resources to cover some proposed measures, Italy’s government has finally approved a much-delayed 55 billion-euro ($60 billion) stimulus package to rescue an economy.

After a two-month nationwide lockdown, Prime Minister Giuseppe Conte announced the new measures in a news conference Wednesday night to rescue an economy crippled by risks associated to COVID-19. 

"The new spending includes emergency income measures, extra funding for companies and tax cuts for some 4 billion euros. Non-reimbursable grants for small and medium-sized companies will also be available," Bloomberg News reported. 

Market implications

The euro will find renewed demand should the eurozone economies worst hit (Spain, Italy) manage to survive these first attempts of opening the economies, relying on the stimulus packages. However, given the number of risks associated with secondary waves of COVID-19, coupled with trade wars coming back to the fore, the US dollar will likely be more favourable.

Moreover, Fed's Powell today lifted the greenback, separating the unlikely prospects of negative rates in the US to that of other nations. The divergence will likely keep EUR/USD on the backfoot overall for some time to come. 

• EUR/USD Forecast: Powell boosts the greenback