CAC Quiet as Eurozone, French Mfg. Reports Within Expectations

The CAC is almost unchanged in the Tuesday session, after the Paris stock exchange was closed on Monday for a holiday. Currently, the index is trading at 5,283.00. On the economic front, there was positive news from the Eurozone and French manufacturing sectors, as Eurozone and French Manufacturing PMIs pointed to expansion. The Eurozone report came in at 56.8, edging above the forecast of 56.7, while the French release of 55.1 matched the estimate. The Eurozone unemployment rate remained unchanged at 9.5%, just above the estimate of 9.4%. On Wednesday, the Eurozone releases Preliminary Flash GDP, with an estimate of 0.5% for the first quarter. In the US, the Federal Reserve is expected to maintain the benchmark rate at 0.75%.

French voters will head back to the ballot box on Sunday, in the second round and final round of the presidential election. The two candidates, centrist Emmanuel Macron and far-right candidate Marie Le Pen have very different views of France’s role in Europe. Macron is pro-European Union, while Le Pen has pledged to take France out of the bloc and even revert back to the French franc, although she has toned down her anti-European rhetoric in the final stages of the campaign. Recent opinion polls show Macron with 60%-65% of the vote, so a  Le Pen victory would be a huge upset and would shake up the French stock market, which is having an uneventful week. The markets have priced in a Macron victory, although a tighter finish than predicted could cause some volatility in the stock market.

Eurozone growth numbers have pointed upwards in 2017, and more growth has meant more jobs and lower unemployment figures. Just a year ago, the eurozone unemployment rate was at 10.3%, but the rate has been steadily decreasing since then. In February, the rate dropped to 9.5%, and the March release is expected at 9.4%. Germany, the largest economy in Europe has led the way, with the unemployment rate dropping to 5.9% in February. A stronger Eurozone economy has buoyed European stock markets, and the CEC has jumped on the bandwagon, as the index continues to trade at levels last seen in February 2008.

President Donald Trump marked 100 days in office over the weekend, but his administration has been plagued by problems and has little to show for itself. Trump’s popularity is at record lows for a new president, but he managed to avoid the embarrassment of a government shutdown, as lawmakers reached an agreement on the weekend. The short-term spending deal, which has bipartisan support, provides funding for government services until September 30th. The deal does not include any funding for a border wall with Mexico, marking a clear concession on the part of Trump. The White House is hoping that this small victory will be the prelude to more cooperation between the Republicans and Democrats on Capitol Hill, as Trump will need some support from the Democrats in order to pass key legislation such as tax reform, one of Trump’s major campaign planks.

Economic Calendar

Tuesday (May 2)

  • 3:50 French Final Manufacturing PMI. Estimate 55.1. Actual 55.1
  • 4:00 Eurozone Final Manufacturing PMI. Estimate 56.8. Actual 56.2
  • 5:00 Eurozone Unemployment Rate. Estimate 9.4%. Actual 9.5%

Wednesday (May 3)

  • 5:00 Eurozone Preliminary Flash GDP. Estimate 0.5%
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. <1.00%

*All release times are EST

*Key events are in bold

CAC, Tuesday, May 2 at 5:25 EST

Open: 5282.40 High: 5294.50 Low: 5275.00 Close: 5283.00

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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.