The numbers are in and Macron and Le Pen will be battling it out! With less than a couple of weeks to go before the next round of the French elections, I’ve rounded up the things you gotta remember if you’re planning on trading the runoff on May 7.
What are the odds of a Macron presidency?
As of this writing and with 97% of the votes tallied, centrist Emmanuel Macron has emerged in the lead with 23.8% while far-right Marine Le Pen trails closely behind with 21.5%. With that, they’ve edged out conservative Francois Fillon and leftist Jean-Luc Mélenchon, representing a significant shift in French politics since the 1950s.
Pollsters predict that this outcome is the best scenario in terms of eliminating “Frexit” concerns as Macron is predicted to snag roughly 60% of the overall vote in the runoff round.
Will a Macron victory be bullish for EUR?
Judging by the market reaction to the first round results, it looks like euro bulls are set to charge if Macron becomes the next president of France. After all, even though he is an independent candidate, he is expected to bring continuity to government and the economy – something that is reassuring for European investors in contrast to Eurosceptic candidates.
Besides, Macron has pledged to lower corporate taxes and to lighten the administrative burden on French companies. He even hopes to encourage British firms and banks to move their business to France by offering a substantial reduction in taxes from 33% to 25% while pledging to exempt 80% of households from property tax. Macron also wants to reduce public spending by 60 billion EUR, cut 120,000 public sector jobs, and provide greater flexibility on the retirement age.
Macron has had a stint in the French treasury, served as deputy rapporteur for the commission to boost economic growth, advised former President Hollande on economic reform, and became the youngest economy minister of France in 2014 before forming his own political party. In short, this dude knows what he’s doing!
Is there still a chance for Le Pen?
Note that a Le Pen victory would revive “Frexit” fears once more as she has promised to hold a nationwide referendum on the country’s EU membership within six months of taking power. Her campaign has focused mostly on jobs, national security, and the threat of Islamic extremism. In essence, the upcoming May 7 runoff could be seen as a proxy for France’s EU membership vote!
How might the euro behave until the runoff?
Euro pairs had a really strong bullish reaction to the first round results so there’s a good likelihood that this momentum could be sustained for the next few days. I mean, look at all these weekend gaps!
Of course opinion polls could continue to impact euro price action as a narrowing lead between Macron and Le Pen leading up to the runoff could keep traders on edge. With that, those gaps could still get filled before more traders decide to join the rally (or not!) as May 7 draws near.