The Austrian Minister of Finance set a deadline for the transaction tax to be implemented in ten European countries last week. Consensus has to be reached by the end of June 2016, or the tax will never be introduced in the financial markets. While the tax was highly discussed and supported by many politicians during the financial credit crises, support has since waned and now there are only a few left who are supporting its implementation. European Law dictates that there has to be at least 10 nations who vote for the proposal so that the law is successfully passed, so just one country voting against might be enough to consign this tax to history.

Nowadays we are facing a financial market with no interest rate, which makes it very difficult for banks to earn money. The question is if the tax would not even make the current environment even tougher for banks to earn enough money, which would place even greater pressure on banks in the European Union – and they are fragile enough at present.

Also there is a high possibility that investors will only invest in financial markets in jurisdictions where this extra tax does not exist – like in the US or the UK. This is not countenanced by European nations who are forecasting the tax incomes using models based on historical trading volumes. There is a high chance that there will be a huge gap between the forecasted revenue and the real income generated because of investors potentially turning their back on the transaction tax.

With this being said there remains a low chance that the transaction tax will pass through. This decision might influence the European markets even more than the BREXIT referendum, where Britain decides whether or not it will stay in the European Union. Coincidently, this also takes place in June.

June is a month which should be highly focused by us traders because these decisions might provide the necessary directional fuel for the remainder of the year. June will be a month with high risks, but also high reward. However, we should not try to guess on which direction prior to a decision being formally made in either event. Just follow the direction where the market goes, but be extra mindful of slippage in the markets… especially on the referendum day.