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The
euro took a small hit in the very early hours of Asia trade with news
crossing of far-right parties in France and Germany polling very
strongly in European Union elections on Sunday. French President
Emmanuel Macron called a snap election in response to Marine Le Pen’s
far-right National Rally gaining seats in the EU parliament. Macron
dissolved the national assembly and called legislative elections on
June 30 and July 7.
I’ll
refer you to this summary from Politico of the election outcome and
what’s ahead for the French election, if you’d like more detail:
Macron bets the house in election to break far-right momentum in France
As
for the EUR, concern over increasing uncertainty in EU politics,
economics, and markets triggered the run a little lower. Something to
bear in mind is that while the far right did well in France and
Germany across other parts of Europe they did not:
Projections have centrist parties retaining majority in the European Union parliament
Back
to the EUR, it gapped a little lower and ticked back nowhere near
covering that gap. Having said that it has not extended lower. As I
post its close to session lows circa 1.0765 and looking precarious.
We
had the final reading for Japanese Q1 GDP today, it came in at an
appalling negative 1.8% annualised on the quarter. Yes, slightly less
appalling that the -2% annualized in the preliminary reading, but
this is a huge contraction. The slight improvement was due to a
revision for the business capital expenditure component of GDP, which
came in at -0.4% q/q in Q1 from the -0.8% decline in the preliminary
estimate. Private consumption fell 0.7%. Private consumption accounts
for more than half of the Japanese economy, this drop is troubling
indeed for Japanese authorities. The Bank of Japan meet this week
(statement due Friday) with some chatter of a further tightening via
a trimming of Japanese Government Bond purchases (see bullets above).
Seems ludicrous in the face of such dreadful data, but there you go.
USD/JPY
popped back above 157.00.
There
isn’t much to report across major FX. There were minor wiggles.
Hong Kong, Australia and China were all out on a holiday today.
This article was written by Eamonn Sheridan at www.forexlive.com.
