Week In FX Europe – EUR Event Risk Has Market On Its Toes

A US and UK holiday next Monday should help keep the markets confined to its now somewhat predictable tight range. However, two issues will keep the market on its toes no matter the holiday. First, the outcome of Ukraine’s election and second the results of the European parliamentary election. The only other focus for Monday is the EU summit in Brussels as well as bill sales from Germany and France.

EU elections results fears this weekend had initially put a more defensive tone in the euro-zone peripheral bond market and has accounted for the recent underperformance in European equities. However, exit polls to date are suggesting that euro-skeptics are not making dramatic gains.

The UK is an exception; UKIP seems to be grabbing seats from the Conservatives and Labour parties (final results due Sunday). So far, this is in contrast to the Netherlands, where the anti-EU party is beaten into fourth place. Most of the EU’s 28 members hold their European vote on Sunday.

Not many people have realized that the ECB is about to have its own version of the Fed’s Jackson Hole forum this weekend. It will start on Sunday May 27th and will end next Tuesday May 29th. This will be an annual Forum on Central Banking and will include government officials, central bank governors, academics, journalists and financial market representatives, exchanging views on current policy issues. The first such forum will take place in Sintra, Portugal, Sunday-Tuesday.

This weekends ECB soiree could be a game changer. Depending on how open and aggressive Draghi will be, throw in the holiday Monday on either side of the pond could give us some volatility. Lack of liquidity will make some of the currency moves very interesting.

• ECB Policy Change Expectation Drives EUR Down – MarketPulse
• Three Days Before Ukrainian Elections Fighting Continues – MarketPulse
• UK’s Anti Europe Party Wins in Local Elections – MarketPulse
• German Business Confidence Falls To Year Low in May – MarketPulse
• UK Retail Sales Rise 1.3 Percent in April – MarketPulse
• Europe Exposed to Protest Vote in Elections – MarketPulse
• European PMI Dips on French Slowdown – MarketPulse
• German Lawmakers Critical of ECB Policies – MarketPulse
• Euro Bonds Decline On Peripheral Debt Worries – MarketPulse
• London Tops New York for Finance – MarketPulse
• Deutsche Bank: ‘Tectonic’ Shift in European Banking – MarketPulse
• IMF Provides Germany with Investment Advice – MarketPulse
• ECB Urged to Buy Bailout Bonds – MarketPulse
• Markets Await ECB Stimulus Measures – MarketPulse
• BOE’s Carney: Home Prices is #1 Risk to U.K. Economy – MarketPulse
• Carney: U.K. Housing Market has Deep Problems – MarketPulse

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