The best is enemy of the good.
The profoundest truths are paradoxical.
Wednesday, March 15, 2017
Exit Polls Suggest Wilders Falls Short Of Predicted Vote Tally
Euro Reaches One-Month High As Dutch Exit Poll Shows Liberal Win
The euro touched the highest level in more than a month after an exit poll showed Dutch Prime Minister Mark Rutte’s Liberals easily beat the anti-Islam Freedom Party of Geert Wilders in Wednesday’s election, allaying concerns about the spread of populism in the currency bloc.
The shared currency was headed for the biggest advance against the dollar since June, extending gains made after the Federal Reserve raised its benchmark rate earlier Wednesday. The Liberal Party is projected to take 31 seats in the 150-seat lower house of parliament compared with 19 seats for the Freedom Party, according to an updated official exit poll released at about 9:30 p.m. in Amsterdam. Wilders’s party has to share second place with the Christian Democrats and centrist D66, both of which are also projected to get 19 seats apiece.
The outcome, if confirmed, would be a worse result than opinion polls had predicted for Wilders, and represents a rejection of his platform of pulling the Netherlands out of the European Union, abandoning the euro. The Netherlands vote has drawn particular scrutiny as it comes before next month’s presidential election in France, where anti-euro candidate Marine Le Pen has vowed to take the nation out of the single currency. Still, Dutch financial markets have been largely untroubled by the vote, with analysts warning France’s bonds may prove more sensitive to shocks in today’s election.
The euro climbed 1.3 percent to $1.0740 as of 8:19 p.m. London time, the highest level since Feb. 7 and the biggest increase since June. The yield on France’s 10-year bonds fell five basis points to 1.04 percent earlier Wednesday.
If the exit polls prove to be accurate, then the result should be a positive development for the euro as it clears one political hurdle and reduces the offsetting force of the political risk premia, Vasileios Gkionakis, a strategist at UniCredit AG, said in emailed comments
The Freedom Party’s tally in the exit poll is on the low side and this will be seen as reducing the risk premium attached to the risk of France leaving the euro zone, according to Sebastien Galy, director of foreign-exchange strategy at Deutsche Bank AG in New York
EUR/USD has a higher chance now of continuing toward the $1.10 region, according to Galy
While the result could change as the night progresses, the markets are taking this as a euro-positive development, Valentin Marinov, head of G-10 FX research at Credit Agricole, said in emailed comments
Continuing unwinding of election risk hedges could see EUR/JPY and EUR/CHF supported as well
There may be some initial skepticism over the exit polls, which could see the euro’s upside contained in the $1.0730-$1.0750 area until the result is confirmed, Viraj Patel, a strategist at ING Bank NV, said in emailed comments.