Italian Prime Minister Matteo Renzi has announced his intention to step down after experiencing what seems to be a humiliating defeat in a referendum over his plan to reform the constitution, throwing the country and the euro zone into confusion. Exit polls showed almost a 60 percent win for the No camp with a strong turnout of 69 percent.
The euro crashed lower in thin Asian trading. EUR/USD dropped just shy of 1.0500 close to testing a multi-year low of 1.0462 hit in March 2015. EUR/JPY fell to 118.65 while EUR/GBP slumped to 0.8305. The euro has bounced back since touching its session low, trading at 1.0578 versus the dollar at the time of writing, but is expected to come under pressure as European traders come into the fray, especially if Italy's fragile banking system comes under pressure.
In what had started as a referendum on constitutional change was turned into a high-stakes game with the political and economic stability of Italy—and ultimately the euro zone—at risk, after Renzi had tied his political future to the referendum result.
U.S. equity index futures slipped after trading resumed on Sunday evening as Renzi's yes camp was projected to have lost the referendum on constitutional reform by a wide margin.
The dollar had softened on Friday as forex traders booked profits from its recent gains following solid, but not spectacular, U.S. non-farm payrolls data.
