The week started with nervousness, as outcome from Italy's election spooked market participants. Euro, which closed last Friday on stronger footing, facing tough headwinds today.

Matteo Renzi, the Italian prime minister, suffered a setback in regional elections on Sunday, with his centre-left Democratic party losing a key governorship in the northwestern region of Liguria while populist parties producing strong performance.





Although Mr Renzi's party won five of the seven regional posts that were being contested, the polls produced some unnerving outcomes. Mr. Renzi's party lost Liguira, to centre-right Forza Italia party, which is led by Silvio Berlusconi, the media mogul and former prime minister who resigned in 2011 amid sex scandals.





Anti-euro, anti-immigrant Northern League performed better than Forza Italia in five of seven regional posts.

Defeat of pro-austerity and pro-Euro parties across European Monetary Union (EMU) certainly triggers alarms among European leaders, who are already having tough time since last year, when Greek people voted for Anti-bailout Syriza party to form government.

However, Italian general election is not due until 2018.

Italian yields have moved up, with benchmark 10 year yield is trading around 1.9% and Euro is currently trading around 1.092 against dollar.