NETHERLANDS: Cabinet To Meet @ 13:30CET To Assess Path After PVV Withdrawal
The Netherlands' Council of Ministers, now sitting as a minority gov't, will meet today at 13:30CET (07:30ET, 12:30BST) to assess its options. This comes after Geert Wilders, leader of the right-wing nationalist Party for Freedom (PVV), withdrew his party from gov't amid disagreements over proposals for stricter asylum policies. The minority gov't is now composed of the conservative pro-business People's Party for Freedom and Democracy (VVD), anti-graft New Social Contract (NSC), and agrarian populist Farmer-Citizen Movement (BBB). Together, they hold a combined 53 seats in the House of Representatives, well short of the 76 required for an overall majority.
- NSC leader Nicolien van Vroonhoven has said that there is the prospect that the minority gov't could look to continue in office, requiring support on a vote-by-vote basis in parliament. She says that "It is absolutely not undesirable. It is not the easiest way to do politics, but it is a way to ensure that the entire House is involved." However, this could be scuppered by the BBB.
- Its leader, Caroline van der Plas says that snap elections are not a given, "An option is that other parties try to work together, instead of holding elections", but that the BBB could not be part of any gov't, adding "For me, the coalition is finished."
- A number of opposition leaders have called for snap elections following the withdrawal of the PVV from gov't. King Willem-Alexander is due in the Czech Republic today for a state visit, but may have to remain in country in order to receive PM Dick Schoof and accept the resignation of the gov't.
- The likelihood of another workable coalition would appear slim at present. However, given the proportional electoral system and a plethora of parties in parliament, the Dutch political system has become adept at reaching consensus and compromise in forming gov'ts.
Chart 1. Dutch House of Representatives, Seats
Source: houseofrepresentatives.nl, MNI. N.b. Numbers in parentheses indicate change in seats in 2023 election.
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USDCAD TECHS: Hits Bear Trigger, New Cycle Low
- RES 4: 1.4415 High Apr 1
- RES 3: 1.4296 High Apr 7
- RES 2: 1.4087 50-day EMA
- RES 1: 1.3906/3935 High Apr 17 / 20-day EMA
- PRICE: 1.3793 @ 17:00 BST May 2
- SUP 1: 1.3760 Low Apr 21 and the bear trigger
- SUP 2: 1.3744 76.4% retracement of Sep 25 ‘24 - Feb 3 bull run
- SUP 3: 1.3696 Low Oct 10 2024
- SUP 4: 1.3643 Low Oct 9 ‘24
The trend set-up in USDCAD deteriorated further Friday, with prices slipping through the bear trigger to narrow the gap with next support. The fresh cycle low reinforces the bear cycle and signals scope for a continuation near-term. Potential is seen for a move towards 1.3744, a Fibonacci retracement. Moving average studies are in a bear mode position, highlighting a dominant downtrend. First resistance to watch is 1.3943, the 20-day EMA.
AUDUSD TECHS: Consolidation Phase
- RES 4: 0.6550 61.8% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 3: 0.6528 High Nov 29 ‘24
- RES 2: 0.6471 High Dec 9 ‘24
- RES 1: 0.6470 High May 2
- PRICE: 0.6445 @ 16:59 BST May 2
- SUP 1: 0.6344/6316 Low Apr 24 / 50-day EMA
- SUP 2: 0.6181 Low Apr 11
- SUP 3: 0.6116 Low Apr 10
- SUP 4: 0.5915 Low Apr 9 and key support
AUDUSD remains inside a consolidation phase, having traded either side of the 0.6400 level for 10 consecutive sessions. The underlying trend remains bullish and the pair is trading close to recent highs. Price has recently breached a key resistance at 0.6409, the Dec 9 ‘24 high. This breach reinforces bullish conditions and signals scope for a continuation higher near-term. Sights are on 0.6471 next, the Dec 9 2024 high. Initial key support to monitor is 0.6316, the 50-day EMA. A clear break of this EMA would be a concern for bulls.
US TSYS: Rates Retreat, Sentiment Improved Though Trade Risk Remains
- Treasuries look to finish near late Friday session lows after trading firmer on the open, higher than expected Nonfarm payrolls at 177k (sa, cons 138k) of which private contributed 167k (sa, cons 125k) triggered the early reversal.
- However, two-month revisions of -58k offset the 39k beat for nonfarm payrolls, with a similar story for private (a 42k surprise vs -48k two-month revision).
- Stocks are back near four week highs - pre-"Liberation Day" levels as hopes of some trade deal being made improved sentiment.
- The Wall Street Journal reports that "Beijing is considering ways to address the Trump administration’s gripes over China’s role in the fentanyl trade... potentially offering an off-ramp from hostilities to allow for trade talks to start." The Journal notes that "discussions remain fluid" and China "would like to see some softening of stance from President Trump".
- Currently, the Jun'25 10Y contract trades -20 at 111-07.5 vs 111-02 low -- initial technical support (50-dma) followed by 110-16.5/109-08 (Low Apr 22 / 11 and the bear trigger). Curves bear flattened, 2s10s -3.480 at 48.002, 5s30s -4.911 at 86.807.
