POLAND: Tusk To Call Confidence Vote In Bid To Regain Initiative
Jun-03 06:36
- Prime Minister Donald Tusk announced that he will call a confidence vote to test his parliamentary majority before the start of cohabitation with new President Karol Nawrocki. He said that his coalition has a 'contingency plan' and will start tabling draft legislation regardless of the President's stance. Tusk said that the confidence vote will be used to demonstrate 'also to our rivals in the country and abroad that we are ready for this situation, that we understand the gravity of the moment, but we are not planning to take a single step back.'
- The main opposition Law and Justice (PiS) went on the offensive after its candidate defeated Tusk's ally Rafał Trzaskowski in the presidential run-off. The conservative party's leader and Tusk's political nemesis Jarosław Kaczyński called for a resignation of the cabinet and proposed talks towards the establishment of a non-partisan 'technical government' after Tusk's administration 'received a red card.'
- Confederation's co-leader Krzysztof Bosak said that his party would vote against the government in a confidence vote, and would support the dissolution of parliament if the coalition collapsed by itself, but the formation of a technical government was unlikely. The party's MP Przemysław Wipler said that the centre-right PSL could propose a candidate for a 'technical Prime Minister' but second co-leader Sławomir Mentzen was sceptical.
- Trzaskowski's defeat has fuelled tensions within the ruling coalition, undermining its cohesion. Marshal of the Sejm Szymon Hołownia suggested that his Poland 2050 party could abstain in a confidence vote, which would bring the government to the brink of collapse. Without the support of Poland 2050, the government would be left with just 210 MPs (and one supportive non-aligned MP), while opposition parties have 215 MPs (plus two non-aligned opposition MPs).
- There may be more clarity later today, with Poland 2050 set to meet to discuss its demands to coalition partners as well as a reshuffle of party executives as a result of Hołownia's dismal result in the first round of the presidential election. Left Together officials will also meet to discuss the terms of potential support for the government, but its MP Marcelina Zawisza suggested that it would require a dramatic shift in policies.
- It can be expected that PiS will now try to exploit cracks in the governing coalition after a major setback provided by the lost presidential election and push for a snap election, in which it could ride the wave of Karol Nawrocki's recent victory to regain power. If an election was held today, it could form a workable coalition with Confederation, whose officials generally signalled a preference for Nawrocki in the presidential run-off, despite the lack of official endorsement.
- Rzeczpospolita reported that the win of a candidate personally chosen by Kaczyński may delay the conversation about leadership succession within PiS. In the short term, the party is looking to prepare to take power should the current coalition fall apart, even as it is considered an outside risk. Some PiS officials have mentioned 'the German option' as a possible scenario of the collapse of Tusk's government, but most expect consolidation and an attempt to survive until the 2027 election.
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USDCAD TECHS: Hits Bear Trigger, New Cycle Low
May-02 20:00
- 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
May-02 19:30
- 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
May-02 19:24
- 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.
