Italian referendum? What Italian referendum?

Euro rebound

Once upon a time investors knew just how to react to unwelcome announcements. In those days the unscheduled resignation of a prime minister, to be replaced by goodness-knows-whom, would have been unquestionably bad for the currency concerned. But no longer. The euro's post-referendum decline lasted, ooh, 90 minutes?

In retrospect it looks as though investors in Europe had fully priced in Matteo Renzi's referendum defeat and subsequent resignation. They saw the early sell-off in the Far East as an opportunity to pick up some cheap euros, to the extent that the single currency became Monday's top performer. It starts today stronger against the US dollar than it was on Friday morning.

It will have helped that President Mattarella prevailed upon Prime Minister Renzi to stick around until a political decision is reached on what to do next. The market also seems to believe that well-heeled investors - possibly from the Arabian Gulf - will come forward to pour new capital into troubled lenders. With shares in the world's oldest bank down by -85% from their price a year ago a cash injection could almost be treated as play money by the right sort of investor.

Surprise PMI win

Britain's services sector purchasing managers' index unexpectedly beat all the European opposition when it came in at 55.2 for November. Unfortunately it did not do much for sterling, which was left with an average loss of -0.2% on the day.

Every one of Monday's dozen or so PMIs came in above the 50 breakeven level, thus indicating growth. The Institute of Supply Management figure from the States put in the best showing at 57.2. Germany's services PMI was close behind Britain at 55.1 and the figure for pan-Euroland services was 55.1.

The only other data of any consequence were for euro zone retail sales and investor confidence. Sales staged a 1.1% rebound in November after falling slightly the previous month. On the year they were up by 2.4%. Sentix's index of investor confidence was softer on the month, down from13.1 to 10.0, but was still comfortably positive.

RBA unchanged

Today's most important event took place in the early hours when the Reserve Bank of Australia kept its benchmark interest rate steady at 1.5%. However, as the semanticists scrutinised the governor's statement they picked on the admission that some "slowing in the year-end growth rate is likely".

The Aussie moved lower after the statement was released, giving back gains it had earned yesterday afternoon. On the day it is down by two thirds of a cent against sterling and is roughly unchanged against the US dollar.

Another high-profile agenda item today is the euro zone Gross domestic product data for the third quarter, which come out at ten o'clock. Quarterly growth of 0.3% is expected. German factory orders and Swiss inflation will play supporting roles this morning with US factory orders, Canada's balance of trade and NZ milk prices coming out after lunch.