NETHERLANDS: Coalition Holds Crisis Meeting After NSC Minister Resigns
The four-party governing coalition is holding crisis meetings at the PM's residence, the Catshuis, following the resignation of Benefits Minister Nora Achahbar. Achahbar resigned amid 'dissatisfaction with the integration discussion within the government' following the highly-publicised violence on the streets of Amsterdam last week. Achachbar hails from the centrist New Social Contract (NSC) party, the third-largest in the coalition behind the far-right Party for Freedom (PVV) and centre-right People's Party for Freedom and Democracy (VVD).
- AD reports that "Sources at the New Social Contract (NSC) party say that the harsh and insulting texts of cabinet members about migrants and Islam were the reason for Achahbar [who is of Moroccan descent], to resign." There is speculation that more NSC ministers could also quit. In the event the party pulls out of the coalition, it would mean PM Dick Schoof's gov't losing its majority in the House of Representatives.
- However, this would be a risky prospect for the NSC. A collapse of the coalition could bring about a snap general election. Opinion polling shows the NSC has seen its support plummet in the year since the last election, from garnering 20% in November 2023 to recording 3-4% in early-mid November 2024.
- Conversely, the PVV of Geert Wilders would likely welcome a snap election given the party holds a wide lead in opinion polling and would be on course to cement its position as the Netherlands' largest party.
Chart 1. General Election Opinion Polling, % and 3-Poll Moving Average
Source: Peil.nl, Ipsos I&O, Verian, Ipsos, MNI
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EURUSD: Fresh Pullback Lows Through the London Close
Fresh pullback lows in EUR/USD through the London close - with greenback strength continuing to feed through - mainly against JPY and EUR in recent trade. A negative close today would be the 12th in the past 14 sessions, with the 200-dma now cracked to the downside for the first time since late July.
- EUR/USD price action keeps the bear cycle intact, with moving average studies now having shifted to a bear-mode position. The recent double top reversal pattern on the daily chart also highlights a bearish theme - compounded by a potential break of 1.0881 Fibonacci support at today's close. 1.0778, the Aug 1 low, the next downside level.
- This naturally returns focus to tomorrow's ECB meeting - the baseline of which sees a 25bps cut, but the ECB declining to provide any material guidance on the December decision - any concrete suggestion that back-to-back rate cuts could persist beyond the December meeting would prove dovish, prompting EUR/GBP to re-focus on 0.8311, key support and the bear trigger.
CANADA: CAD Top FX Performer After Yesterday’s Swings To 50bp Cut Calls
- USDCAD at 1.3773 is close to the day’s lows despite oil futures coming under pressure, as CAD now surpasses the USD as top performer in G10 FX.
- We wrote ahead of yesterday’s CAD CPI report that technical levels and positioning presented a headwind for further gains for the pair and this has borne out so far.
- There has been a large swing in analyst expectations towards a 50bp cut from the BoC next week, with TD Securities the only prominent analyst preferring a 25bp cut, but it’s likely offering peak dovishness for the BoC at least in the near-term.
- It sees a pullback from a brief post-CPI high of 1.3839 with the pair has also easing d away from overbought territory, whilst support is a little way off at 1.3725 (Oct 11 low).
- It’s a light local docket until the BoC on Wed now, with tomorrow instead seeing greater focus on US retail sales.
SCANDIS: USDNOK Pierces Sep High As Scandis Underperform G10
Scandi currencies underperform the G10, seemingly a function of today’s broader USD strength. Norges Bank Governor Wolden-Bache’s speech headlines tomorrow’s regional calendar, while Swedish LFS data is due on Friday.
- USDNOK (+0.95% today) has pierced the Sep 11 high at 10.9137. Immediate resistance is 10.9625 (76.4% retrace of the Jul to Sep selloff), with the Jul 25 high at 11.1388 seen further out.
- SEK crosses have seen similar intraday price action to NOK, with EURSEK +0.6% and USDSEK +0.8%.
- A correction on our earlier post previewing Governor Bache’s speech. The topic will be “Norges Bank's balance sheet”, potentially reducing the scope for meaningful policy rate signals.
