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

  • Event Risk Concerns from Ukraine and EU Parliamentary Elections
  • Draghi Front and Center At The First ECB Forum

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.

WEEK AHEAD

* EUR European Parliament election
* JPY Bank of Japan Policy Minutes
* EUR German Unemployment Rate
* CHF Gross Domestic Product
* USD Gross Domestic Product
* JPY National Consumer Price Index
* JPY Tokyo Consumer Price Index
* CAD Gross Domestic Product

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell