EUR: Political angst likely to drive towards recent range lows - Westpac

Tim Riddell, Research Analyst at Westpac, suggests that the Eurozone data, especially surveys, have actually exceeded consensus and would normally provide a solid base for EUR.

Key Quotes

“However, markets are becoming more concerned over how strongly anti-euro Le Pen may poll into the first round of the presidential elections.”

“Although Le Pen’s polling (around 25%) has been relatively stable in February, the gap over the two main contenders for the run-off (Fillon and Macron) has widened and concern that a far-left contender could usurp the centre is increasing, widening yield spreads and weighing on EUR.”

“Polling for the Netherlands’ anti-EU right wing is drifting but still high. However, the real issue is what coalition forms rather than the risk of Geert Wilders being PM.”

“Solid data should support, but political angst is likely to drive EUR towards recent range (EUR/USD 1.04-1.10) lows until hard data comes back into focus.”