The euro has edged lower in the Monday session, as the pair is currently trading at 1.0940. On Sunday, Emmanuel Macron easily defeated Marie Le Pen to win the French presidential election. It’s a quiet start to the week, with no major events out of the eurozone or the US. Still there was some positive news in the eurozone, as German Factory Orders gained 1.0%, above the forecast of 0.7%. As well, Eurozone Sentix Investor Confidence climbed to 27.4, beating the estimate of 25.3 points. The indicator has now improved over four consecutive months, pointing to stronger confidence among investors and analysts.
Emmanuel Macron has become France’s youngest president at age 39, and he rode to victory in convincing style. Macron won 64% of the popular vote, with Marie Le Pen taking 36%. Macron’s margin of victory was larger than the polls predicted, but the markets had priced in a decisive win, so the euro has showed little response to the election results. Although Macron certainly “won big”, it should be noted that fully one third of French voters either abstained or voted a blank ballot as a protest vote. This means that Macron was viewed by many voters as a default choice, given that his opponent was the leader of the far-right and has been accused of being racist and xenophobic. The French elections now enter a new phase, with parliamentary elections slated for mid-June. Macron’s En Marche! party is barely a year old and is unlikely to win a majority, which would mean a power-sharing setup in parliament, likely between Macron’s party and the center-right. Similar to the presidential election, the parliamentary election is full of uncertainty, and opinion polls during the election campaign will be important as fundamental releases and should be treated as market-movers.
