Market Concerns Eased After Macron’s First Round Victory

Devata Tseng FxPro

The first-round voting of the French presidential election was revealed on Sunday night April 23. The two top candidates: independent centrist Macron and the far-right wing Le Pen, won 23.7% and 21.7% of votes respectively. Fillion and the far-left wing Jean-Luc Mélenchon both got around 19% of votes. The result was in line with expectations, black swans didn’t appear.

The terror attack that occurred on April 20 in Paris was likely to give Le Pen one last push just a few days ahead of the election. However, the votes Le Pen got were even lower than the recent polls of 23%, indicating the probability of her presidency is lower than expectations.

As Macron got the first place in the first-round of voting, surpassing Le Pen with 2% of votes, market concerns over the EU’s collapse after Le Pen’s presidency has been eased to an extent.

The consensus was that Macron and the Le Pen would likely get into the second round with Macron likely winning the final vote. The outcome is in line with the first half of the consensus. Markets are now focused on the second-round of voting with the first-round outcome lifting market confidence and expectations on Macron’s victory in the second-round on May 7.

The voting ratio was around 80%, higher than the forecast of 70%, indicating French civilians’ high concerns on the futures of France and the EU.

The outcome of the first-round voting pushed the EUR and European stocks up, and weighed on safe havens after the release of the outcome. EUR/USD soared more than 180 points, hitting the highest level of 1.0918 since November 11, 2016. EUR/JPY hit a 1-month high of 120.72. USD/JPY hit a 2-week high of 110.53. Spot gold plunged from 1284.17 to a 2-week low of 1265.38. France’s CAC 40 index hit the highest level of 5393 since January 2008. The Euro 50 index hit the highest level of 3578.10 since March 2015.

Author

Devata Tseng

FxPro

GBP/USD upside remains capped below 1.3400

GBP/USD trades in positive territory, with the upside capped below 1.3400 in the second half of the day on Friday. The US Dollar remains on the back foot following the weaker-than-expected US Nonfarm Payrolls report, which fades Fed rate hike expectations, and helps the pair stay on track for weekly gains.

EUR/USD stabilizes near 1.1450, looks to post weekly gains

EUR/USD builds on Thursday's gains and trades modestly higher on the day at around 1.1450. The US Dollar struggles to find demand following the disappointing June employment report and helps the pair remain on track to end the week in positive territory.

Gold on track to snap four-week losing streak as USD weakens on easing Fed hike bets

Gold retains its bullish bias for the third straight day and extends its rebound toward $4,200. The precious metal seems poised to register gains for the first time in five weeks as investors reassess the timing of a potential Fed rate hike after the disappointing June employment data.

Crypto Today: Bitcoin, Ethereum, XRP advance amid renewed capital inflows

Bitcoin maintains its upward momentum, holding above the $61,000 mark at the time of writing on Friday. Major altcoins such as Ethereum and Ripple are also posting gains, signaling a modest uptick in market sentiment and renewed risk appetite among investors.

The Iran war failed to trigger a recession. Can the US economy keep defying expectations?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.