Wilders and the EUR, FOMC and Brexit in Focus

It’s a busy day ahead for the markets and the element of surprise will leave the markets hanging for the outcomes of the Dutch election and the FOMC interest rate decision and release of the FOMC’s economic projections this evening.

The Dutch elections underway today in the Netherlands will have the markets keeping an eye on the votes, with the EUR finding support through the day following the final polls going into today’s election, which showed that Wilders’ support weakened further in the final hours. The final I&O Research poll showed Wilders’s down 4-seats to 16 seats, with the Ipsos survey placing Wilders down 3-seats over the last week to 20 seats.

Prime Minister Rutte looks to have gained the upper hand in the handling of the scuffle with Turkey from the weekend and early part of the week, the liberals polled to win 27 seats according to the I&O Research poll and 29 seats according to the Ipsos survey.או

The markets will be wary ahead of the election result, polls having recently caught the markets offside, the EU referendum and U.S Election cases in point, but with Wilders’s popularity on a downward trend since the turn of the year, it’s looking good for Rutte, with the other main parties more likely to form a coalition with the Liberals.

Exit polls will be conducted and the markets will get the first of the exit polls at around 9pm with an update at 930pm. While the official results won’t be out until 4pm on 21^st March, the markets will be aware of the seats won by the respective parties before morning, the next step being parties moving towards a coalition.

With the EUR/USD up 0.27% at $1.0633 at the time of the report, the markets will also be looking ahead to key macroeconomic data out of the U.S this afternoon and of course, the FOMC’s interest rate decision and economic projections, which will be out later this evening.

February retail sales and inflation figures out of the U.S are scheduled for release and are forecasted to continue supporting the markets’ optimism over a rate hike later this evening. While we can expect the Dollar to find some support should the FED hike rates, the focus will be on the FOMC’s economic projections, a sustained Dollar rally likely to need a 4^th rate hike squeezed into this year’s median projections, together with upward revisions for economic growth and inflation for this year and next.

A move this month certainly opens the door to a quarterly rate hike through the year and judging by the number of hawks within the FOMC, it’s a plausible outcome though it remains to be seen whether the FED is willing to put a 4^th on the table so early on in the year.

One does wonder whether weak retail sales and inflation figures this afternoon could railroad a rate hike this evening. The risk is certainly there, however unlikely such an event would be…

Across the Pond

The pound has managed to bounce back from Tuesday’s losses, with cable up 0.63% at $1.22292 at the time of the report. The pound has been the beneficiary of the markets buying into the dips of late, while the markets will need consider today’s employment data ahead of tomorrow’s BoE monetary policy decision.

Weak numbers will not only weigh on the pound ahead of tomorrow’s MPC, but will also affirm the BoE’s current neutral position ahead of the British government invoking Article 50 next week, the BoE reluctant to lift rates amidst a rising inflation environment.

Plenty to consider, though we expect sentiment towards this evening’s FOMC to take center stage, with the Dollar having add to losses through the Asian session, the markets pointing to the FOMC retaining a 3-rate hike median for the year. At the time of the report, the Dollar Spot Index is down 0.22% at 101.48, the fate of the Dollar in the hands of this afternoon’s data and tonight’s FOMC.