Who’d have thought that an ex-banker would have been asked to run the third most heavily indebted country in the world after years of animosity towards them, who for most people are to blame for the current crisis. 

Populist thinking fails to appreciate that it’s the politicians who are ultimately to blame for this bout of turmoil in the financial markets and it is only them who can possibly turn things around.  At least this time there’s a degree of hope that a banker turned politician will be able to implement the sort changes required to pull Italy back from the brink.

For now the markets seem to be calm but the job that lies ahead for Mario Monti is no minor one.  The sort of reforms that are needed will come up against substantial opposition and for many the fact that he’s an ex-banker will probably rub some people up the wrong way.  At least he has some things on his side that should assist him with the job.  Despite its vast debt piles Italy has a huge portfolio of reserves and assets, one of which is its hoard of gold with one of the biggest stockpiles in the world.

This morning the FTSE is tentatively higher by some 20 points to 5570.  Last week ended up being a relatively bullish one for the index after Friday’s rally and on the hourly chart a double bottom has formed around the 5350 area.  Over the short term this 5400 to 5350 area has become rather a crucial support area meanwhile to the upside 5620/40 are seen as resistance.  Over the longer term the index rejected the 200 day moving average at the end of October however it has slowly but surely been trying to get back up there and it will be interesting to see whether the momentum and appetite from the bulls is there to carry us higher.  The Dow on the other hand has not even rejected its 200 day moving average and whilst it has suffered from a bit of choppiness around this 12000 area it’s still above that level.

Economic data is thin on the ground today but the week starts to get more interesting on this front tomorrow with GDP numbers from German, France and the EU.  Never before have so many people in the UK been this interested in GDP data from the continent as it could so worryingly have a knock on effect for us.

Things appear to be looking up for the euro, well at least short term anyway.  Traders of the euro were encouraged by the instalment of a new Italian PM, which helped the single currency pretty much reinstate all the losses it made against the dollar last week.  There was also a bit of a boost from the Greeks, as their new Prime Minster took up his new role and the finance minster stated his priority was to get the next EU-led loan tranche in place. EUR/USD is trading at 1.3716 currently, with support at 1.3675 and resistance at 1.3815.

Gold was in favour on Friday as the fear of Italy joining Greece in the cess pit receded and investors returned to the market, helping push the yellow metals price higher.  Investors watching gold’s price of late may view it as being caught between two factors, the bearishness of a sovereign default which could trigger a liquidation run from holders needing to cover margin calls elsewhere, and the support provided by the uncertainty over potential economic bankruptcies.  The weakening greenback also helped keep the precious metals price higher on Friday and all in all gold added 32.5 dollars to its price, finishing at 1790.7.

With the weakening US dollar and strengthening equity markets, the appetites of energy investors were wetted on Friday and hence the price was pushed to new recent highs. Traders will still have lingering concerns over faltering Europe though and with signs of a slowdown in China – the world’s second highest oil consumer – the road ahead may not be smooth for black gold’s price.  This morning Brent is at 113.15.