How to trade the Italian referendum?

In case of negative vote we expected initially sell off of the euro and indices and appreciation of the yen and precious metals. Europe may be affected by a new wave of political instability. "No" vote is a potential catalyst for a new Italian banking crisis. The Prime Minister of the country promised to resign if the vote is "No", thus causing new elections in the country. The popular "Movement 5 Stars" will try to prevail and if he will trigger a referendum on leaving Italy from EU. Which can lead to exit from the EU, chaos in the eurozone and destruction of the euro.

A positive vote would calm the markets and pressure on Italian banks, which will be positive for risky currencies such as AUD, NZD, will initially support the euro, and will positively affect the Italian and European shares and indices.

Referendum comes on the eve of the expected statement of Mario Draghi for the ECB's decision on the future monetary policy of the central bank and the likely continuation of the program of quantitative easing on Thursday this week, and the rise in US interest rates next week, which is possible to limit somewhat speculative movements in the euro.

This Sunday Italians vote in the referendum together with the presidential election in Austria is seen as a test of the strength of populist and far-right political parties in Europe. Constitutional referendum in Italy will determine the political fate of Prime Minister Matteo Renzi and show the impact of unsystematic politicians third largest economy in the eurozone.

Voters in Italy decide whether there should be a change to 47 from a total of 139 constitutional texts adopted by the parliament with less than two-thirds of the voters, prompting this referendum, which, according to proponents of the proposals would allow for easier and rapid adoption of laws in the country.

Referendum also aims to reduce public spending. Electoral reform will also provide a proportional representation system. And it will make it almost impossible populist parties to gain power.

Some opponents of the popular consultation, however, say the proposed reforms are not deep enough, while others fear that weakened Senate will be able to verify the effectiveness of adopted regulations.

The thing is that the new system provides entry into the Senate not elected national - people accountable directly to voters, and officials who will pursue their interests and not those of the people. They will also expand the powers of the management and will be significantly shortened the bureaucratic apparatus.

At the moment the consent of both chambers, which significantly complicates the process of management of the state.

The political consequences of a possible "no" will probably depend on the activity of voters and how much big difference between "yes" and "no" decision was made.

If voters reject the reform Renzi is expected to resign immediately. But analysts believe that President Sergio Mattarella, who must appoint someone formation of a new government is unlikely to take the step until Parliament adopts draft budget.

In case of victory of the 'no' "Movement 5 Stars" is expected to call for early elections, but President Mattarella not expected to dissolve parliament before being adopted reform of the law on the election of deputies. The withdrawal of Renzi will undoubtedly depend on the size of eventual defeat.

Polling stations opened at 7.00 hours local time (08.00 hrs. Bulgarian). Voting will continue until 23.00 pm. (24.00 Bulgarian time) and in it are invited to participate over 46 million  voters.

About 4 million registered voters abroad vote ended on Thursday evening. Their votes cast by correspondence shall be counted in a secure building an industrial warehouse on the outskirts of Rome.

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