Geert Wilders, the leader of the far-right party of freedom (PVV) has a strong possibility of winning the Dutch general election which commences on Wednesday. If he does gain power it will cause serious problems for the EU.
It may be the case however, that Wilders would have to form a coalition with other parties. Due to his outspoken views, other parties are reluctant to do so. He has stated his willingness to close the country’s borders, close mosques and ban the Koran. His intention is to pull the Netherlands out of the EU. We have already seen how much a referendum can effect a currency in the UK. If Wilders wins the election, we could see a big fall in Euro value.
Mario Draghi, the head of the European Central Bank (ECB) spoke late last week at the ECB monetary policy statement and Press conference. There was no change on interest rates, which came as no shock and no change to the current Quantitative Easing (QE) program. Draghi did however state that a reduction to QE from €80bn to €60bn was to come into effect in the not too distant future. Draghi’s stance was bullish throughout his speech which reassured investors and saw GBP/EUR drop below 1.15.
Consumer Price Index data is released on Thursday and is a measure of price changes by the comparison between the retail prices of a representative shopping basket of goods and services. Essentially it is a measure of inflation and change in purchasing trends. Considering the problems with inflation within the bloc in the past, it is a data release that is watched keenly by traders and can cause swings in Euro value.
Trade balance is a measure between imports and exports of total goods and services. It will be interesting to see whether the uncertainty surrounding Brexit will impact Eurozone trade.
Keep your eyes on this release, as if the figures come in against expectations there could be volatility on the exchange.
Political uncertainty historically weakens the currency in question. With three general elections within the Eurozone this year, all of which are expected to be close fought I am of the opinion the Euro could be in for a rough year.
If I was selling Euros I would take advantage of current levels.
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