(16 JULY 2019)DAILY MARKET BRIEF 1：EUR indecisive ahead of European Commission final vote

Things are getting serious for EU top position candidates. Following a month of intense negotiations, the 28 EU national leaders finally came with a final list consisting of Charles Michel as President of the European Council (formally elected), Josep Borrell High Representative for Foreign Affairs, ECB President Christine Lagarde and finally President of European Commission Ursula von der Leyen. Yet the final call gets to members of European Parliament, a vote that is expected to be tight and which puts the single currency in torment. A failure to confirm top leaders would not only be a major blow for the bloc, but also for the ECB ahead of next Thursday monetary policy meeting.

Compromise candidate Ursula von der Leyen final pledge to secure EU top positions will likely be a game changer ahead of final vote gathering from 6 pm that requires the backing of a minimum of 374 votes out of 747, although 400 votes would be appropriate for the majority to be able to pass laws. In the event of rejection by MEPs, an emergency summit should occur next week if the leadership package is not approved, which could potentially trigger a EUR rally amid speculations of a less-dovish ECB head by considering Jens Weidmann as a potential candidate. However, that would likely be a short-term view since a dovish council would have the last word anyway. The task is therefore becoming challenging for outsider candidate Ursula von der Leyen as her promises need to convince far-right and left Eurosceptic parties as well as socialist and liberals without being able to count on the Greens which ruled out any support (~10% of total MEP seats).

EUR/USD is therefore like to remain under pressure short-term. Heading along 1.1230.