The single currency decreased after the market opening against the dollar. The Austrian Legislative Election brought new uncertainties. The young conservative leader Sebastian Kurz, an anti-immigration millennial, is about to become the new Austrian Chancellor next Sunday after his victory in the General Election. Yet he will likely open up to the far right in order to build its government. This reminds us of 2000 when Far-right entered the government. Yet it does not seem that the new government will be against the euro.
In Spain, tensions continue and Catalonia still has to declare unilaterally its independence. There are tensions within the independentists. Some believe that Catalonia is not ready yet for its independence. Madrid is now giving an ultimatum to Catalonians leaders. For the time being, companies are moving away from Catalonia, other entrepreneurs are opening account in bordering areas.
As a result, political tensions are strong in Europe. The Eurodollar pair lies below 1.18 and any news can trigger further political fears. We continue to believe that strongest uncertainties are not in centre stage at the moment but the Greek debt issue has definitely the potential to weigh on the single currency. The next ECB monetary policy is not at the moment the main driver even though markets have strong tightening expectations
By Yann Quelenn