French Election Preparation

 

EUR Direction Depends on Paris Winner

Week Ahead Geopolitics to Cloud Central Bank Outlook

Here a roundup of how some investors and strategists are preparing for the vote:

Oanda Corp.

  • After Brexit, “we’re really over-preparing for any type of risk event,” said Stephen Innes, a senior currency trader in Singapore who plans to arrive at work at 2 a.m. local time on Monday to catch the New Zealand market open
  • Oanda has reduced leverage on some trades as a “defensive mechanism” to protect clients in case of a strong reaction in markets. Le Pen getting around 30 percent of the vote would “provide some jitters for the market,” he said
  • Innes will be watching the pound along with the euro, and the New Zealand dollar and Australian Dollar may come into play if there’s a risk rally. Emerging-market currencies will also be on his radar, particularly the risk-sensitive Korean won

Bank of America Merrill Lynch

  • “We will have coverage from Asia in any case. Personally, I will be ready to come to the office if the exit polls are bad,” said Athanasios Vamvakidis, head of G-10 currency strategy in London.
  • Markets are still under-pricing the risks and are “unprepared for the worst” — that being if Le Pen and Melenchon are in the second round. If this scenario eventuates, markets could start pricing the risks of France leaving the euro, he said.

Citigroup Inc.

  • “We will have an early Monday morning start,” said Zoeb Sachee, head of European government bond trading in London.
  • “Unless you have a Melenchon-Le Pen second round, I expect liquidity to be reasonable on Monday morning.”

Commonwealth Bank of Australia

  • “We’ll come in on Sunday evening for the release of exit polls and see what the lie of the land looks like,” said London-based strategist Peter Kinsella.
  • “If we see increasing chances of a Le Pen versus Melenchon second-round vote, then it’ll be a late night.”

Deutsche Bank AG

  • “I will be there,” said Sebastien Galy, director of foreign-exchange strategy at the bank’s office in New York. “Twenty-four-hour desks and trading desks in the U.S. and then early in Asia will likely be very well manned.”
  • Clients will probably manage their stop losses and buy orders to avoid being affected by wild swings. Liquidity will build as Tokyo, Singapore and Hong Kong open and should surge with the start of trading in Zurich and London before fading, Galy said.

–With assistance from Anooja Debnath Anchalee Worrachate Vassilis Karamanis Tanvir Sandhu Emma O’Brien Lilian Karunungan and Michael G. Wilson

©2017 Bloomberg L.P.

Bloomberg

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Senior Currency Trader and Analyst at OANDA
Stephen has over 25 years of experience in the financial markets and specializes in Asian currencies at OANDA. After having started his trading career with NatWest Bank, he is currently based in Singapore as a Senior Currency Trader and Analyst with OANDA, focusing on the movement of the Aussie Dollar and ASEAN Currencies. Stephen has an extensive trading experience in Interest Rate Futures, Money Markets and Precious Metals. Prior to joining OANDA, he worked with organizations like Cambridge Mercantile, Nat West, Garvin Guy Butler, Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

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