After French President Emmanuel Macron defeated far-right rival Marine Le Pen in the country’s first round of presidential elections on Monday, the euro seemed to be snapping a seven-day losing streak versus the dollar.
Investor fears over the euro zone’s second-largest economy’s future orientation have impacted the currency, adding to anxieties about the economic repercussions of the Ukraine conflict. Meanwhile, increasing US rates and hopes that the Federal Reserve will act rapidly to combat inflation have increased the currency. The Japanese yen has been one of the biggest losers, falling to a new seven-year low against the dollar.
Second Round of French Election
On April 24, Macron will face Le Pen in the second round of the French presidential election, which should be a close contest. Nonetheless, Macron’s first-round victory relieved the euro, which rose as high as three-quarters of a percent to $1.0955 in Asian trading hours. It was the last trading at $1.09080, up 0.3 percent. According to currency strategists, the competition remained on a knife’s edge, with negative implications for the euro.
“The President Macron’s narrower-than-expected victory will fuel suspicions that Le Pen may win the presidency,” MUFG analysts wrote. “First-round results and opinion polls pointing to a tight second-round result will maintain a minor weight on the euro in the coming weeks.”
The dollar index measures the dollar’s value against a basket of six currencies; it was flat on the day, dropping just shy of the 100 level attained. The Bank of Japan maintains interest rates around zero; however, investors have seen no need to exit yen wagers as the dollar has gained strength. The yen fell as much as 1% to 125.55 yen per dollar.
Sterling stayed almost flat versus the dollar at $1.30380. The Russian rouble sank in wobbly trade as the central bank opted to lift temporary capital curbs; it lost some of the previous week’s gains.