The Australian dollar started the week on a strong note, with an upbeat market mood supporting the risk-sensitive ‘Aussie’. Recent strong data from China also gave AUD a boost, as the ‘Aussie’ often trades as a proxy for the Chinese economy.
- Euro spends May on a high
- Macron victory banishes fears of Frexit
- EUR Monthly lows: £0.83, $1.08, AU$1.44, NZ$1.56, C$1.48
- EUR Monthly highs: £0.87, $1.12, AU$1.51, NZ$1.62, C$1.52
With Macron taking the reins of the Eurozone’s second largest economy the prospect of a ‘Frexit’ – a French exit from the EU – was banished and the euro accordingly stormed higher against its currency counterparts.
EUR/USD notably advanced all the way to $1.12, while the euro was also able to rack up serious gains against the pound.
However, the battle isn’t over for Macron.
The new French President will have to garner some serious support in June’s legislative elections if he hopes to implement his planned policy changes.
The latest polls have shown that Macron’s ‘Republic on the Move’ party is currently expected to come out on top in June, taking 29% of the votes.
The National Front – the far-right party headed by anti-EU Marine Le Pen – is expected to come second with 17%.
The elections are due to take place on June 11th and 18th. If Macron’s party does win the day the euro could benefit from the prospect of political stability in France.
"I'm aware of the anger, anxiety and doubts that a large proportion of you have also expressed. It's my responsibility to listen to them while protecting the most fragile, by better organising solidarity, by combating all forms of inequality and discrimination, by implacably and resolutely ensuring your security, and by guaranteeing the nation's unity."
- Emmanuel Macron following his victory in the second round of the French electionThe European Central Bank (ECB) will also be in focus in June. ECB President Mario Draghi has been pretty downbeat about the prospect of making any changes to quantitative easing or interest rates in the near future, claiming that the current level of stimulus is appropriate.
If he maintains that view at June’s policy gathering the euro could be pressured lower. Conversely, any change of heart from the ECB official would be euro-positive.
‘Grexit’ concerns could also return to the spotlight if Greece is unable to reach an accord with its creditors.
At the end of May Greek Finance Minister Euclid Tsakalotos indicated that the nation wouldn’t continue with bailout negotiations if some form of debt relief wasn’t agreed.
Any further deterioration in relations between Greece, the IMF and the EU would pile pressure on euro exchange rates.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)