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10/06/24
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EUR Drops as Macron Calls Snap Election
On Monday, the euro dropped sharply after Sunday’s gains by far-right parties in European Parliament elections led to French President Emmanuel Macron calling a snap national election.
The uncertainty in France adds another element to a busy week for markets with inflation data for the U.S. due on Wednesday, the same day as the Fed policy meeting, and the Bank of Japan meeting at the end of the week.
The euro fell 0.5% versus the dollar to $1.0747, the lowest since May 9. It also dropped 0.55% versus sterling to a close to a 2-year low of 84.43 pence and was later 0.5% lower against the Swiss franc at a 7-week low of 0.9632 francs.
Lee Hardman, senior currency analyst at MUFG said although the increase in right-wing party support was generally expected, the surprising element was that Macron called a snap election, and that made the market nervous.
The U.S. dollar was also higher after the jobs report on Friday showed that employers in May added more jobs than anticipated, while wages also rose more than expected, leading traders to trim expectations that the U.S. central bank would cut rates in Sept.
The May consumer price index due on Wednesday will be the next major data to drive Fed expectations.
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