EUR: populism experienced a defeat but uncertainty is set to continue

At last week’s Dutch elections, far-right party leader Geert Wilders was defeated. He did come second but is not likely to be part of any coalition negotiations because other parties are unwilling to work with his populist, anti-immigration policies.

Commerzbank, the second largest bank in Germany, posted an article the day after the Dutch elections, stating that market concerns surrounding a far-right party win in France are still legitimate, despite the opinion polls. The article said, ‘even after the defeat handed out to Geert Wilders in the Dutch election, it is far from certain that Le Pen will fail. Her voter base is highly motivated, and it is also unclear whether conservative voters would really vote for former socialist Macron in the run-off.’ In the latest opinion polls, the second round of voting is expected to be 59% Macron and 41% Le Pen. Given how opinion polls performed in 2016, we are not sure how much to read into this.

Meanwhile, the European Central Bank also expressed optimism and indicated that interest rate hikes were becoming more likely.

In the week ahead, the bulk of the economic data releases will happen on Friday when both manufacturing and service sector data are due to be announced.