020 7898 0500Following on from the FOMC meeting, where we also saw the euro strengthen against the dollar, we had the release of the exit polls from the Dutch elections. The exit polls are a significant development, given that the Dutch Electoral Council will not announce the official result until Tuesday next week. And a week is a long time in the world of currencies.
A disruptive far-right win could provide momentum for the remaining two major European elections this year in France and Germany, but the exit polls show that the liberal party (VVD), led by Prime Minister Rutte, has emerged as the biggest party and is forecast to win 33 seats. The challenge from the far-right party PVV, led by Wilders, is forecast to win 20 seats.
The next stage revolves around coalition talks which could take months. Wilders is not likely to be part of any coalition negotiations, with all major parties unwilling to work with him because of his populist, anti-immigration policies. With this combination of a less optimistic FOMC and a more certain political backdrop, we saw the euro strengthen to hit a five-week high against the US dollar.
In terms of economic data, it was fairly quiet yesterday. Inflation came in at 2% for February. This followed preliminary estimates, so although it was an acceleration from the 1.8% in January, it was hardly a surprise.
In other news, there will be heightened security fears in France. Two were injured in a shooting at a French school and a letter bomb exploded at the International Monetary Fund office in Paris.
There was also news that the German finance ministry in Berlin intercepted a parcel bomb sent to Finance Minister Wolfgang Schaeuble on Wednesday.
The last trading session of the week sees the G20 meeting in Germany. G20 meetings are attended by finance ministers and central bankers from 20 industrialised nations where policy is discussed and crafted.
