UBS On-Air: Paul Donovan Daily Audio 'Après moi, le déluge?'
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The French government faces a vote of confidence tomorrow, with both the far right and the left pledging to vote against Prime Minister Barnier over the budget. A likely scenario would be Barnier continuing as a caretaker prime minister, and the 2024 budget being rolled over.
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The desk interprets the recent political developments in Europe and North America as contributing to heightened volatility in FX markets. Increasing political uncertainty, especially with Germany's upcoming elections and Canada's internal strife over economic nationalism, sets a backdrop for potential market shifts. Per the full note from UBS, these events underscore a broader trend of unstable political landscapes that can impact economic policy and market perception. Traders should brace for fluctuations as investors react to these developments amidst a lack of significant data releases in the near term.