Weekly Market Update 24/4

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Market Update

The Euro saw a five month high as Emmanuel Macron takes the lead for the race to become France’s next President. Centrist hopeful Macron will now face far-right candidate Marine Le Pen in the final round of voting on 7 May. With 40m votes counted last night, French interior ministry figures had former investment banker Macron with 23.5 per cent of votes and Len Pen on 22.3 per cent. It came as no surprise to markets with the French people voting as expected. The other two frontrunners, centre-right Francois Fillon and hard-left Jean-Luc Melenchon, polled 19.5 per cent each. Beneath them came Benoit Hamon on 6.2 per cent. Fillon and Hamon later endorsed Macron, conceding defeat. Melenchon said he would not comment until the official results are out.

The Euro initially jumped two full cents against the US Dollar and the British Pound as investors entered new longs and frantically covered shorts. Whilst the currency has retraced some of its gains at the time of writing, the markets believe that the political novice Macron is a shoe-in for the Presidency in two weeks. Focus remains on the Eurozone this week as Macron and Le Pen prepare for their run-off in two weeks. In addition to that, The European Central will meet to discuss monetary policy for the Eurozone.

The British Pound held onto its gains despite a lacklustre print on UK Retail sales highlighting the largest quarterly fall since early 2010. Sterling closed the week more than 2% up against both the Dollar and Euro supported by British Prime Minister Theresa May’s call for a snap election. Sentiment surrounding the Pound was boosted by expectations that May will win a substantial majority.

The Dollar was little changed by the end of last week however soon depreciated off the back of the French election results. Market participants were also eyeing events in Washington On Thursday, US Treasury Secretary Steven Mnuchin said the Trump administration will unveil a tax reform plan soon and expects it will be approved by Congress this year.

Political developments in France are likely to set the tone for the Euro ahead of Thursday’s European Central Bank meeting and Friday’s euro zone inflation data.

Below are the main events that will move the markets this week:

09:30     GBP Public Sector Net Borrowing (Mar)
14:00     USD Housing Price Index (MoM) (Feb)

12:45     EUR ECB Deposit Rate Decision
12:45     EUR ECB Deposit Rate Decision
13:00     EUR Consumer Price Index (YoY) (Apr)
13:30     EUR ECB Monetary policy statement and Press Conference
23:01     GBP Gfk Consumer Confidence (Apr)

09:30    GBP Gross Domestic Product (YoY) (Q1)
09:30    GBP Gross Domestic Product (QoQ) (Q1)
10:00     EUR Consumer Price Index (YoY) (Apr)
13:30     USD Core Personal Consumption Expenditures (QoQ) (Q1)
13:30     USD Gross Domestic Product Price Index (Q1)
13:30     USD Gross Domestic Product Annualised (Q1)


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