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Macron cruises to victory

Macron cruises to victory

GBP
Cable has been trading just below the 1.3000 figure this morning, levels last seen in late September 2016, in light of the recent and strong rally. After advancing for the last four weeks, GBPUSD seems to have found some strong resistance for the time being, always against the backdrop of positive risk appetite trends and ahead of the Bank of England’s (BOE) Super-Thursday.

Markets expect the ‘Old Lady’ to stay put at its meeting later in the week, with the Monetary Policy Committee revising its GDP figures for the current year to lower levels while inflation forecasts might be reversed higher. The Pound has a big week ahead, with the BOE’s policy decision and quarterly inflation report (QIR) on tap. Meanwhile, for today, the UK Halifax house price index is eyed.

EUR

Expectations that Macron would win the French Presidential election triggered further capital inflows into the Eurozone, underpinning the Euro in the lead-up. Projections indicated that Macron won the French election with just above 65% of the vote. As an independent with no parliamentary representatives, elections scheduled for 11 and 18 June will have significant implications for his future prospects.

German Chancellor Merkel’s CDU party also won the Schleswig-Holstein state election which boosted confidence in a Merkel victory in September. The Euro pushed to six-month highs of around 1.1020 against the Dollar before being hit by profit taking with a retreat to 1.0970 as the Macron victory was confirmed. The number of long speculative Dollar positions dipped to seven-month lows, lowering the risk of further selling. Markets will look for any shift in European Central Bank (ECB) rhetoric at June’s policy meeting following the French election.

USD

US non-farm payrolls for April printed above consensus expectations at 211,000 compared with forecasts of 190,000, although the impact was offset by a downward revision to the paltry March data; down to 79,000 from 98,000.

Unemployment declined to a 10-year low of 4.4% from 4.5% previously and the participation rate edged lower. There was an expectation matching the 0.3% increase in average earnings, although the annual increase was held at 2.5%. The data overall did not trigger a significant shift in expectations surrounding Fed policy and there were no monetary policy comments by Fed Chair Janet Yellen.

Data towatch: 4.30am Chinese Imports, Exports, Trade Balance, CNY Imports & Exports. 1.15pm Canadian Housing Starts April YoY. 3pm US Labour Market Conditions Index. 3.30pm Bank of Canada Review. Midnight UK BRC UK Like for Like Retail Sales April YoY

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