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01/07/24
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EUR Higher Despite Vote for France’s Right
On Monday, the euro began the week with strong gains, and EUR/USD traded at about 1.0756, up 0.41% for the day in the European session. The euro is at the highest level since June 14.
On Sunday, France went to the polls and voter turnout was at a 4-decade high. The vote turned out to be a rebuke for French President Emmanuel Macron, whose Ensemble alliance came in third (and last) position. Marie Le Pen’s far-right National Rally (RN) party won 33% of the vote and will likely be the biggest party in the new parliament.
If the RN doesn’t manage to win the majority, it may set the stage for political uncertainty and a hung parliament, which would not be good news for the euro and the French financial markets.
On Monday, the euro and the French markets were however in positive territory, as investors seemed relieved that the RN may not obtain a majority in parliament. This relief may however be erased quickly if the NR performs strongly in the second round of voting, which will take place on July 7.
The focus will move from France to German inflation, which will be released later in the day. It is expected German CPI will drop 2.4% in May to 2.3% y/y in June.
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