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Euro advances as Macron heads for huge majority

By AFP

Added 12th June 2017 02:26 PM

"The rejection of populism has been one the main reasons why the euro has been the best performing G10 currencies this year."

Euro advances as Macron heads for huge majority

"The rejection of populism has been one the main reasons why the euro has been the best performing G10 currencies this year."

(Credit: AFP)

CURRENCY


The European single currency advanced Monday after French voters put President Emmanuel Macron's party on course for a crushing parliamentary majority.

The British pound meanwhile headed back toward last week's lows that had been triggered by a shock British election result that has thrown the country into uncertainty.

Around 1045 GMT, the euro jumped above $1.12 after Sunday's first round of voting for the France's National Assembly.

The pound fell back to $1.2718, having recovered from Friday's seven-week low of $1.2636.

In France, projections showed Macron's Republique en Marche (Republic on the Move, REM) party and its ally MoDem tipped to win between 400 and 445 seats in the 577-member National Assembly in next Sunday's second round.

"The rejection of populism has been one the main reasons why the euro has been the best performing G10 currencies this year," said Lee Hardman, currency analyst at Bank of Tokyo-Mitsubishi UFJ in London.

"There were further positive political developments In Europe over the weekend as the French public provided another vote of confidence in President Macron's policy agenda for economic reform."

Official final results showed Macron's one-year-old REM and allies MoDem winning 32.32 percent, ahead of the Republicans on 21.56 percent and the FN on 13.20 percent.

Such a share would give Macron -- who founded his party just a year ago -- one of the biggest parliamentary majorities seen in the modern French state.

Strong euro weighs

However, the strong euro -- combined with a pre-weekend technology sell-off on Wall Street -- weighed heavily on eurozone stock markets, with Frankfurt and Paris each shedding more than one percent.

"It appears that the euro's solid gains against both the dollar and the pound following Macron's parliamentary success in France has sucked the life out of the eurozone indices," said Spreadex analyst Connor Campbell.

Sterling took a beating on Friday after Prime Minister Theresa May's ruling Conservative Party lost its parliamentary majority, days before it starts crunch Brexit talks with the EU on exiting the bloc.

May called the election three years early in a bid to strengthen her hand in looming Brexit negotiations, but the gamble backfired spectacularly and now she must rely on the support of Northern Ireland's Democratic Unionist Party.

Key figures around 1045 GMT

Euro/dollar: UP at $1.1221 from $1.1196 at 2100 GMT on Friday

Pound/dollar: DOWN at $1.2718 from $1.2741

Dollar/yen: DOWN at 109.99 yen from 110.28 yen

London - FTSE 100: DOWN 0.3 percent at 7,508.19 points

Paris - CAC 40: DOWN 1.1 percent at 5,241.33

Frankfurt - DAX 30: DOWN 1.0 percent at 12,692.72

EURO STOXX 50: DOWN 1.2 percent at 3,542.51

Tokyo - Nikkei 225: DOWN 0.5 percent at 19,908.58 (close)

Hong Kong - Hang Seng: DOWN 1.2 percent at 25,708.04 (close)

Shanghai - Composite: DOWN 0.6 percent at 3,140.45 (close)

New York - Dow: UP 0.4 percent at 21,271.97 (close)

Oil - Brent North Sea: UP 25 cents at $48.40 per barrel

Oil - West Texas Intermediate: UP 17 cents at $46.00

 

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