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Thanks to a combination of Macron lead in France’s first round of Presidential elections, low liquidity, and a bit of short squeeze, the euro ended up on top during the Asian session. Here’s what’s up!

  • Macron, Le Pen advance to runoff elections on May 7
  • U.K. Rightmove house price index grows by 1.1% April in 1.3% growth in March
  • BOJ further reduces 3-5-year bond purchases

Major Events:

EUR jumps on French election relief – Unless you’ve been living under a rock, you should know that France had just started voting for its next President.

Centrist Emmanuel Macron is now one step closer to holding the highest position in the land after he came out on top of the first round of voting and qualified for the May 7 runoff voting against far-right bet Marine Le Pen.

Macron came out on top with 23.75% of the votes, followed by Le Pen with 21.53%. Conservative Francois Fillon snagged 19.91% of the votes, while Leftist Jean-Luc Melanchon finished fourth with 19.64%.

The victory of pro-EU Macron represented not only the defeat of two far-left and far-right candidates, but also the decreased chances of France exiting the EU and further weakening the monetary union.

This is probably why markets staged a “relief rally” with the euro gapping higher against its major counterparts. It also didn’t hurt that stops were hit along the way and magnified the initial move.

Overall risk appetite – The relatively satisfactory election results (in the risk-averse market players’ minds) pushed high-yielding assets higher.

Nikkei, which took comfort in a yen selloff, rose by 1.34% while Australia’s A SX 200 also climbed by 0.15%.

China’s bourses continued to be wary of escalating tensions with North Korea, though, which is probably why the Shanghai index slipped by 1.63% while Hang Seng also dipped by 0.29%.

Even oil prices joined the risk-on bandwagon, as Brent futures shot up by 29 cents to $52.25 per barrel while U.S. crude oil prices also popped up by 24 cents to $49.86.

Market Movers:

EUR – The euro was understandably the biggest gainer of the session after Macron snagged the biggest slice of the French voter pie (or macaron).

The party didn’t last long, however, as profit-taking and gap-filling soon took place and dragged the euro and the rest of the major currencies to near last week’s closing prices.

EUR/USD gapped 145 pips (+1.33%) higher to open at 110.55 before capping the session with a 22-pip loss (-0.20%) to 110.33. Ditto for EUR/JPY, which opened a whopping 381 pips (+3.26%) higher before steadying at 119.30 and EUR/GBP, shot up 120 pips (+1.44%) higher before levelling off to .8478.

USD and JPY – Risk appetite was the name of the game during the Asian session, so low-yielding currencies like the dollar and yen slid to the bottom of the currency pile.

USD/JPY gapped 145 pips (+1.33%) higher despite EUR/USD’s upside gap. Ditto for GBP/JPY, AUD/JPY, and CAD/JPY which also gapped 184 pips (+1.32%), 114 pips (+1.39%), and 121 pips (+1.50%) higher respectively before seeing slight intraday retracements.

Meanwhile, the dollar index also saw a 106-point drop (-1.05%) before levelling off to 99.758.

Watch Out For:

  • 8:00 am GMT: German IfO business climate (112.4 expected, 112.3 previous)
  • 10:00 am GMT: German Bundesbank monthly report
  • 10:00 am GMT: U.K. CBI industrial order expectations (9 expected, 8 previous)