Euro: Euro gains on Macron win, gains against bruised sterling

HONG KONG — The euro edged up a fraction in early trade on Monday after French President Emmanuel Macron comfortably defeated far-right rival Marine Le Pen on Sunday, a result broadly expected by markets and political analysts.

The euro opened higher at $1.0840, last traded at $1.0807, up 0.12% from Friday but failed to break far from a two-year low set last week.

The currency rose 0.14% against the sterling to 84.22 pence, hitting a three-week high in early trade.

With 97% of the votes counted, Macron was on course for a solid 57.4% of the vote, Home Office figures showed. In his victory speech, he acknowledged that many people voted for him just to keep Le Pen out, and promised to address many French people’s sense that their standard of living was falling.

“Macron’s clear victory should reassure markets that European momentum will continue. In the short term, the logical main winner of this election could be the euro, which was still flirting with two-year lows against the dollar last Friday,” said Frederic Leroux, a member of Carmignac’s investment team.

“However, the negative aspect of this rather convenient choice for the markets could stem from a hasty decision in favor of a Russian oil embargo, which would exacerbate inflationary pressures and the economic slowdown in Europe.”

The euro, along with most of its major peers, has been damaged by an uptrend in the dollar fueled by rising US Treasury yields. Markets are repositioning for an aggressive US Federal Reserve rate hike program.

The dollar index came in at 101.08 Monday morning, just below a two-year high of 101.33 set on Friday.

Sterling was slightly weaker against the dollar at $1.28275 after falling 1.4% on Friday to its lowest level since November 2020. Weak sales and consumer confidence data and comments from the Bank of England earlier in the week signaled a possible slowdown in sterling’s expected upside.

Among the major currencies, the Japanese yen was hit the hardest by rising US interest rates, with Japan keeping benchmark yields low. As of Monday morning, the dollar was a tiny bit firmer against the yen at 128.63.

The dollar is up 11% against the yen so far this year. Last week’s 129.4 was the dollar-yen’s highest in 20 years.

The Australian dollar was also under pressure at $0.7233, its lowest against the dollar in a month, while bitcoin fluctuated around $39,500, little changed over the weekend. Euro: Euro gains on Macron win, gains against bruised sterling

Jaclyn Diaz

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