EUR Steady Ahead of French Elections

By Saqib Iqbal Ahmed | NEW YORK
The euro held near a three-week high against the U.S. dollar on Thursday as some traders shut down broad bets against the common currency ahead of the first round of the French presidential elections on Sunday.

The dollar shook off early weakness to trade little changed against a basket of major currencies as the latest data on domestic jobless claims and business activity in the mid-Atlantic region did not change traders’ views of modest U.S. economic growth and low inflation.



Traders were taking their cues from polls showing French centrist Emmanuel Macron easily beating far-right candidate Marine Le Pen in the second round two weeks later, analysts said.
“Markets are banking on (Macron’s) ability to drive the country out of its misery,” said Naeem Aslam, chief market analyst for Think Markets in London.

Pollsters forecast the most likely outcome of the first round is that Macron will go head-to-head against Le Pen in the May 7 second round.

“Euro bulls will definitely respond to positive news around Macron, but that dissipates as the reality of low turnouts sets in,” said Alfonso Esparza, senior currency analyst at OANDA in Toronto.

“Everybody remembers the Brexit polls and even the U.S. election polls. After those misses it is going to take a lot to make the markets trust them again.”

The euro was up 0.09 percent against the dollar at $1.0719 after hitting a three-week high of $1.0777 earlier in the session.

The dollar index, which tracks the greenback against a basket of six major rivals, has fallen in recent weeks on weaker-than-expected economic data and worries about the Trump administration’s ability to get tax and fiscal legislation passed.

The dollar index, was up 0.06 percent at 99.796, after hitting a more than three-week low of 99.374 earlier in the session.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza