The euro has extended its considerable gains over the past two weeks ahead of this weekend’s final round of the French presidential election. Markets appear confident that centrist Emmanuel Macron will win.The euro touched six-month highs on Friday, while not being able to break above the psychologically important $1.10 threshold ahead of the decisive round of the French presidential election on Sunday.
Market players appeared to be expecting centrist Emmanuel Macron to see off the challenge from far-right candidate Marine Le Pen, who had said she would withdraw France from the eurozone’s single currency.
She did make the distinction, though, between a new currency for daily use and the euro that she said would be retained “for large companies that trade internationally.”
With markets deeming a Le Pen victory unlikely, the euro has been able to gain nearly 2.5 percent over the past two weeks, hitting a high of $1.0990 in morning trading in Europe on Friday.
Yen a safe haven
Valentin Marinov from Credit Agricole in London told Reuters the easing of political risk in Europe should support the euro becoming even stronger against the greenback.
[A Macron win] “will allow investors to refocus their attention on the rather resilient eurozone fundamentals at the moment, the improving growth outlook picture as a whole and indeed the fact that the European Central Bank will take more steps ever closer to tapering its quantative easing purchases,” Marinov said in a statement.
In other parts of the world, commodity-linked currencies took their cues from a slide in oil prices. The greenback dropped 0.2 percent against the Japanese yen.
“I think it’s just a direct correlation with oil prices and a little bit of risk aversion coming into the dollar/yen exchange rate,” FX broker Oanda’s Stephen Innes argued.
hg/sri (Reuters, dpa)