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Will Dutch set anti-establishment ball rolling in Europe?

Will Dutch set anti-establishment ball rolling in Europe?

EUR
Voters in the Netherlands are going to the polls today in the first of three crucial Eurozone elections this year. The race is dominated by current Prime Minister Mark Rutte’s centre-right party and that of Geert Wilders, who is running on an anti-immigration platform. Mr Wilders has pledged to take the Netherlands out of the EU, close all mosques and ban the Koran, whilst Mr Rutte has said that the election is an opportunity for voters to “beat the wrong sort of populism”.

Overnight, Bloomberg reported that unnamed EU officials have commented that the European Union isn’t planning to authorise Brexit talks until June 20. The 27 other members of the EU have pinpointed this particular date as it will see a meeting of government ministers in Luxembourg. The bloc hasn’t ruled out governments’ having the opportunity to give approval at a scheduled gathering on May 16, or at an extraordinary meeting should the paperwork be completed in time.

GBP

Sterling carried on its losing battle for the eighth straight week as it fell against the US Dollar and a basket of major currencies. The main reason for this was fears of a prolonged political jousting match over the terms of Britain’s exit from the European Union and the threat of a second Scottish Independence Referendum. Charlotte Hogg’s resignation from the Bank of England had little impact on the Pound as her monetary policy stance was unknown.

Today’s average earnings data will be watched closely as consensus forecasts for a
slowdown in the annual rate to 2.4%. Should the prediction be realised, it would lessen the pressure for a Bank of England policy tightening.

USD

US NFIB small business confidence was released yesterday. Although confidence remained in positive territory, the data showed that the index retraced to 105.3 for February from the previous month. Also, US headline and Core Producer Prices both rose 0.3% in February with a headline annual increase of 2.2%, the strongest figures since March 2012. It would seem that overall inflationary pressure was contained and lower fuel prices could have an impact on consumer prices data that is due for release today.

There was no shift in very strong expectations that the Fed will raise interest rates by a further 0.25% to 1.0% today. The firm Dollar and decline in oil prices could lead to a slightly less hawkish tone from the Federal Open Market Committee.

JPY

The Japanese Yen extended its gains against a basket of currencies yesterday after Japanese industrial production figures were revised for the better. Production fell by 0.4% on the month in January. This was a better showing than the 0.8% fall previously reported. Compared with January 2016, production is now up 3.7%, beating the preliminary estimate of a 3.2% rise and helping the Yen take some ground against the major currencies.

Data to watch: 9.30 am UK Average Earnings incl & excl Bonus, Claimant count rate & change. ILO Unemployment rate. 1.30pm US Consumer Price Index & Core CPI, CPI excl Food and Energy. Retail Sales, Retail Sales ex Autos & Control Group. 6pm US Fed Interest Rate Decision, Monetary Policy Statement & Press Conference & Economic Projections.

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