The Euro US Dollar (EUR USD) exchange rate held steady this morning as markets await the second televised debate in the French presidential election.
The debate, to be held later this evening will features all 11 presidential candidates, however investors will most likely be focused on the performance of far-right candidate and leader of the Nation Front party, Marine Le Pen and her main rival and current frontrunner Emmanuel Macron.
While Macron comfortably claimed victory in the first TV debate observers are expected him to face a greater challenge this time as his opponents set their sights on the independent frontrunner as they attempt to catch up to him in polls.
Yves-Marie Cann, a pollster at Elabe said;
‘Macron is the favourite right now, so of course everyone is attacking him. The main thing to keep in mind is that the lines can still move.’
Markets fear that the focus on Macron could allow Le Pen to escape from the debate relatively unscathed, possibly leading to her gaining support if she is able to avoid being drawn into discussing her patchy economic plans.
Polls currently suggest that while Le Pen will claim the first round, she will lose the second round to Macron in May.
However with polls failing to predict the shock election of Trump and the outcome of the UK’s EU referendum, EUR investors remain cautious, especially following reports that a record low turnout from the French electorate could strengthen her campaign as her supporters are seen to be more likely to go out and vote.
Meanwhile the EUR USD exchange rate was able to limit its losses this morning thanks to better than expected Retail Sales figures from the Eurozone.
Sales leapt from 0.1% to 0.7% in February, sailing past initial expectations that sales would rise to 0.5% and leading to annualised figure to climb from 1.5% to 1.8% and surpassing forecasts that sales would slide to 1.4%.
The rally was largely lead by Germany and France, with retailers from the two largest economies in the Eurozone reporting that sales were unexpected robust after a poor performance in January, with the gains being driven by non-food items thanks to strong textiles sales.
However despite the impressive rebound in sales, analysts remained unconvinced that the sector will show positive growth in the first quarter.
Meanwhile the US Dollar struggled to advance this morning following a growing uncertainty on the ability of Donald Trump to deliver upon his economic promises.
The latest concern were prompted by worries that Trump may not receive U.S. congressional support for his choice for Supreme Court justice, with USD investors fearing that another failure after his ill-fated healthcare legislation will hurt his chances of passing his radical tax reform and spending plans.
Such an event would likely see the US Dollar tumble as traders have pinned much of their hopes for future US growth on Trump’s ambitious economic agenda.
Looking ahead the EUR USD exchange rate is likely rally tomorrow as economist predict that the Eurozone’s private sector performed well last month, with the Services PMI expected to climb from 55.5 to 56.5.
However the US Dollar may strike higher first as the US releases its latest Trade Balance with the trade deficit expected to have fallen from $48.5bn to $44.9bn.
Current Interbank Exchange Rates
At the time of writing the EUR USD exchange rate was trending around 1.06 and the USD EUR exchange rate was trending around 0.93.