Week In FX Europe - EUR Event Risk Has Market On Its Toes

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 |  Includes: FXB, FXE, FXF, UDN, UUP
by: Dean Popplewell

By Dean Popplewell

    • Event Risk Concerns from Ukraine and EU Parliamentary Elections
    • Draghi Front and Center At The First ECB Forum

A US and UK holiday next Monday should help keep the markets confined to its now somewhat predictable tight range. However, two issues will keep the market on its toes no matter the holiday. First, the outcome of Ukraine's election and second the results of the European parliamentary election. The only other focus for Monday is the EU summit in Brussels as well as bill sales from Germany and France.

EU elections results fears this weekend had initially put a more defensive tone in the euro-zone peripheral bond market and has accounted for the recent underperformance in European equities. However, exit polls to date are suggesting that euro-skeptics are not making dramatic gains.

The UK is an exception; UKIP seems to be grabbing seats from the Conservatives and Labour parties (final results due Sunday). So far, this is in contrast to the Netherlands, where the anti-EU party is beaten into fourth place. Most of the EU's 28 members hold their European vote on Sunday.

Not many people have realized that the ECB is about to have its own version of the Fed's Jackson Hole forum this weekend. It will start on Sunday May 27th and will end next Tuesday May 29th. This will be an annual Forum on Central Banking and will include government officials, central bank governors, academics, journalists and financial market representatives, exchanging views on current policy issues. The first such forum will take place in Sintra, Portugal, Sunday-Tuesday.

This weekends ECB soiree could be a game changer. Depending on how open and aggressive Draghi will be, throw in the holiday Monday on either side of the pond could give us some volatility. Lack of liquidity will make some of the currency moves very interesting.

WEEK AHEAD

* EUR European Parliament election

* JPY Bank of Japan Policy Minutes

* EUR German Unemployment Rate

* CHF Gross Domestic Product

* USD Gross Domestic Product

* JPY National Consumer Price Index

* JPY Tokyo Consumer Price Index

* CAD Gross Domestic Product