Medium Term / Sell
Chief Economist & CIO
Price Target: 1.1450
Market Price: 1.1665
As it happens, I just had a chat with a journalist in Spain. The takeaway surrounding the country's preparing for a Friday vote of No Confidence in prime minister Mariano Rajoy's government?
• This is bad; it creates more uncertainty.
• If the motion caries it will be the first time in Spanish history that a sitting government falls on a vote.
• The Socialists will form government; they have bizarrely decided to “keep” the Conservative budget if they oust Rajoy.
Time Horizon: medium term.
The vote is tomorrow, and the market remains relatively muted for now. The event risk is the actual vote... but the likelihood is that EURUSD sells off.