The Swiss franc logged in another winning week while the shared currency had a mixed run. Are we about to see a repeat performance?
European election results
The parliamentary elections were held over the weekend and the results have just started to trickle in as of this writing.
Market watchers had been expecting a shift in power favoring populist parties, which might mean big changes on immigration, budget, and trade.
French exit polls revealed that President Macron’s party suffered a narrow defeat to Marine Le Pen. Early results in Germany signaled that Chancellor Angela Merkel’s Christian Democrats are in the lead but with fewer seats. In the United Kingdom, Nigel Farage’s Brexit Party might also claim victory.
Another outcome worth watching is the configuration of the European Commission that follows after the results are made official. This will also involve the selection of ECB head Draghi’s successor, widely expected to be German central bank President Jens Weidmann.
Overall market sentiment
The lack of major catalysts from the Swiss economy could also keep the franc supported if risk-off flows persist, particularly on account of geopolitical risks and trade tensions. Not even a bit of jawboning last week seemed enough to stop the franc’s climb!
Don’t forget that European banks will be closed for the Ascension Day holiday on May 30, possibly spurring profit-taking or headline-sensitive action then.
Missed last week’s price action? Read the EUR & CHF price review for May 20-24!