Dutch Elections: Chance of a large negative surprise have fallen

In view of the analysts at TDS, Dutch elections kick off the Eurosceptic electoral risks for Europe, but they think both the fears and chance of a large negative surprise have fallen.

Key Quotes

“The anti-EU PVV has seen their consistent polling around 25% fall to around 16%. This now suggests a toss-up as to whether they or VVD, the senior party in the current government, will be the largest party, and given the splintered nature of Dutch politics, makes it unlikely PVV would enter any coalition even if they did eke out the win. And even if a government held a referendum on leaving the Eurozone, it would be non-binding and require a Parliamentary vote.”

“Polls close at 8pm GMT, with some results dribbling out in the hours after that, but may be slow due to controls put in place limiting the computer count to manage hacking risks. The fact this plays out in the afterglow of the Fed makes any clear reaction difficult, but we would expect a stronger move lower in EUR and rates should PVV end up with around 35 seats in the 150 seat Parliament (current polling 23), but this is more as markets increase the risks around a Le Pen victory, with a smaller drift higher as EUR shorts are reduced if PVV falls short and one risk moves into the rear-view mirror.”

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