Good morning,

EUR: Austrian Government set to collapse

Following the release of film footage showing the Freedom Party’s leader My Heinz-Christian Strache offering exclusive government contracts to a supposed oligarch’s niece, all ministers from the far-right party have now resigned. With two days remaining before the EU elections begin, this will apply additional political uncertainty to the euro. It is widely expected that there will be an increase in support for far-right politicians and those who favour an anti-EU stance – this covers the quiet rise in populist and nationalist government coalitions across the European Union. This is a key risk event heading into the weekend, and there is an opportunity to take out protective forward contracts as well as firm orders to catch any volatility during the market opening on Sunday evening.

GBP: Bad run continues

The pound continues its course lower in one of the worst runs I have seen in the last five years. Every GBP chart and index is full of red candles and negative percentage marks.

Theresa May is set to discuss the recent breakdown in cross-party talks with her cabinet, however, we don’t expect this to provide any rational upside to the pound.

USD: Markets doth cap towards the Fed

Overnight, the Chinese central bank injected 80b yuan into their financial system, over seven days, marking the biggest economic stimulation in more than one month. US markets are looking for a similar handout from the Fed, but they remain reluctant to soften their stance given trade concerns. Jerome Powell firmed up any doubt by reminding us that the outcome of the trade tensions remains extremely uncertain and that forecasting a happy ending would be foolish. Current market predictions reveal two 25 basis point cuts over the next 12 months.

Have a great day.