3 Numbers: ECB forum, European elections, EURUSD & DAX
• European elections shake up the political powers
• DAX and EURUSD both look toward ECB delivering
Today’s market holidays in UK and US and ultra-thin economic calendar should keep markets quiet. The immediate market drivers will be the European elections and their effects on both national and EU-level policies, and the speeches from the European Central Bank’s (ECB) leaders.
As the pressure on the ECB to ease monetary policy further has increased, and the central bank has practically guaranteed to do so in June, market expectations have built up and now some sort of action by the ECB is practically required, or the market reaction would be swift. Watch out for a lack of resolve in the central banker’s speeches – if they start downplaying the need for further action, the EURUSD could easily jump higher. Today’s key speakers are Mario Draghi (08:00 GMT), Vitor Constâncio (08:30 GMT) and Benoît Cœuré (11:00 GMT). For more on the event and the ECB’s situation, see Bloomberg’s article and the event’s website.
European elections: Rise of the “populists”
As the “Other” is very heterogeneous, all of them will not fit into a single or even three groups – the really crazy ones probably end up going solo anyway. Still, the “Others” stop the incumbent large groups from forming easy majorities on key votes, and could occasionally share the same views on some votes, turning them into a political brake that is hard to negotiate with. There will be talks in Brussels beginning today between the newly elected “Others” to join existing groups – or form their own groups.
The European Council will meet next Wednesday and begin discussing who would be their candidate for the Commission’s presidency. The most probable candidate is Jean-Claude Juncker, as EPP won the elections. The blog Open Europe has a calendar of the key dates of the political process.
The rise of the “Others” will surely rattle national-level politics as well. In UK, which effectively operates on a two-party system, most European parliamentary seats were won by a third party, UKIP. In France, the Front National also was the biggest party in the elections. This could push the mainstream parties to become more “populist” in order to keep some of their support. Already the French prime minister Manuel Valls repeated his call for “less Europe”. It will be an interesting year in Europe, for sure.
EURUSD and DAX