Market movers today

  • The week starts out quietly on the data front, so focus will be on politics, notably the outcome and implications of the EU parliamentary elections.

  • A key area of interest will be the EU election result implications for the appointment of the next head of the EU Commission, which could also have implications for the ECB presidential appointment . 

  • In the UK, the results for the Conservative Party will be scrutinised in light of the impending leadership contest.


Selected market news

Although the EU elections saw shrinking support for established parties in many countries, the influence of Eurosceptic groups will remain limited with a vote share of c.23% (from 20.6% previously). Losses for the Social Democrats and Conservatives - which lost their absolute majority for the first time since 1979 - were amply offset by gains for the Greens and Liberals, meaning that overall sentiment in Parliament will remain pro-EU. Still, in France, President Macron's party En Marche lost the race against the far-right Rassemblement National, calling into doubt his grand plans for domestic reforms and further EU integration.

Similarly, in Germany, critical voices in the grand coalition are getting louder after another heavy defeat for the SPD party. While national governments will digest the repercussions of the election results in the coming days, focus in Brussels reverts to coalition building and the election of a new Commission presiden. Note that in the UK, the Conservatives only got 9% of the votes, while Nigel Farage's new Brexit Party got 32%. It may further support the hard Brexit camp as the Conservatives prepare to elect the successor to PM May.

All in all, we expect financial markets to react positively to the EU election results (higher equities and yields). But it is not a big market mover, as we see it. The next major events are the ECB and Fed June meetings.

On Friday night, Fitch changed the outlook on Portuguese government bonds from "stable" to "positive". Fitch pointed to falling public debt/GDP and a low headline fiscal deficit and sees little risk of a sharp deviation from current fiscal policy after the October elections. It shows that the positive rating cycle is still intact in Portugal despite the weaker Eurozone outlook. That said, Moody's did not change the rating or the outlook for Spain. However, the Spanish economy is, like Portugal's, in quite good shape and it is just a matter of time, in our view, before Spain receives a positive outlook.

Download The Full Daily FX Market Commentary

This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.

Feed news

Latest Forex Analysis

Editors’ Picks

EUR/USD under pressure near 1.1380 ahead of Powell

EUR/USD sees fresh selling and tests daily lows near 1.1380 region amid a broad-based US dollar comeback, as all eyes remain on the Fed Chair Powell's speech for fresh insights on the US interest rates outlook. 


GBP/USD keeps gains near 1.2760 post-UK data

The GBP/USD pair keeps the bid tone intact near the 1.2760 region despite a sharp drop in the UK CBI Retailing Reported Sales and broad US dollar recovery. Eyes on Powell's speech. 


USD/JPY: recovers to 107 area as markets wait for Powell's speech

10-year US T-bond yield extends slide, drops below 2%. US Dollar Index stays calm near the 96 mark. Fed's Williams & Bostic, FOMC Chairman Powell are scheduled to speak later today.


US Conference Board Consumer Confidence Preview: Employment sustains optimism

Income gains, employment and general economic prosperity support confidence. Decline in Q2 GDP not impacting sentiment. Low inflation and faling interest rates are positive consumer trends.

Read more

Gold consolidates recent upsurge to multi-year tops, comfortable above $1400 mark

Gold adds to the post-FOMC upsurge amid escalating geopolitical tensions. A modest USD uptick/stability in equity markets prompts some profit-taking. The downside remains limited ahead of Powell’s speech later this Tuesday.

Gold News