The Euro is likely to see considerable volatility today after the European Central Bank (ECB) interest rate decision (12:45) and subsequent press conference (13:30). Although no interest rate change is expected today, clues as to future ECB direction are likely to be offered.
The general feeling is that policy will be kept loose despite inflation finally starting to climb higher after years of weak growth and low inflation. However there is likely to be an acknowledgement that policy will need to be tightened and that should come with an end to the asset purchasing programme which is currently running, something Germany in particular would like to see an end of.
The Euro is likely to react to any noises although there is unlikely to be anything too ground breaking considering the likely market volatility with the approaching European elections.
The Euro should come under considerable pressure in these coming weeks as the elections in both the Netherlands and France now start to pick up pace. The Dutch election is held only next week and the prospect of Geert Wilders Party for Freedom forming a government would in my view see the Euro weaken sharply. However, the nature of Dutch politics which usually involves coalition governments does mean it will be difficult for him to form a government.
What the markets are really interested in though is how much support is out there for Mr Wilders which could give some indication as to how well Marine Le Pen will do in the French election. Whatever the outcome, Wednesday 15th March is paramount for any clients with a Euro requirement. Those clients looking to sell Euros would be wise to consider moving before the Dutch election and take the risk out of it as the result could throw up some surprises.
Meanwhile Marine Le Pen has signalled she will resign if she loses a referendum to pull out of the EU whilst current President Francois Hollande has also stated that “There is a threat” of Le Pen winning the election. He highlighted that the far right has not been so high in the polls for more than 30 years.
Clients with a Euro selling requirement may be prudent to consider the shock victories for Brexit and Trump last year, and with clear indications that a far-right political landscape is gaining momentum in Europe, acting sooner rather than later may save you in the longer term. Speak to a member of our team on 01494 725 353 or email myself at firstname.lastname@example.org for a free quote.
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