Following clashes over a plan to grant refugee status to illegal immigrants and the question of where to find the resources to cover some of the proposed measures, the Italian government finally approved a very delayed recovery plan for 55 billion euros (60 billion dollars) to save an economy.
After a two-month lockout nationwide, Prime Minister Giuseppe Conte announced the new measures at a press conference Wednesday evening to save an economy crippled by the risks associated with COVID-19.
“The new spending includes emergency revenue measures, additional funding for businesses and tax cuts of around 4 billion euros. Non-repayable grants for small and medium businesses will also be available,” said Bloomberg News.
The euro will find renewed demand if the economies of the euro zone most affected (Spain, Italy) manage to survive these first attempts to open up the economies, based on the stimulus plans. However, given the number of risks associated with the secondary waves of COVID-19, coupled with the resumption of trade wars, the American dollar will probably be more preferred.
In addition, the Fed’s Powell today lifted the greenback, separating the unlikely outlook for negative interest rates in the United States from those of other countries. The divergence will likely keep EUR / USD on the global backfoot for some time to come.