In spite of ongoing worries over the uncertain nature of the French presidential race the Euro US Dollar exchange rate trended higher in the wake of the bank holiday weekend.
While the threat of a fresh populist upset remains the Euro benefitted from the relative weakness of the US Dollar.
Opinion polls continue to point towards centrist candidate Emmanuel Macron emerging victorious, with National Front leader Marine Le Pen given only modest odds of winning the second round of voting.
This has allowed some sense of optimism to return to the single currency, even though markets nevertheless remain jittery over the uncertainty that surrounds the ultimate result.
As analysts at HSBC noted:
‘With just two weeks before the first round, 36% of polled voters said that no candidate is meeting their expectations and 14% of people will decide their vote at the last minute (BVA poll, 8 April). There is still much to play for.’
Even so, domestic data is not likely to offer the EUR USD exchange rate particular support in the near term.
No change is forecast for the finalised Eurozone consumer price index, which would underline the current neutral policy outlook of the European Central Bank (ECB).
Comments from ECB policymakers are also likely to affirm the central bank’s intention to leave monetary policy unchanged for some time to come.
However, if April’s Eurozone consumer confidence index shows a modest improvement in sentiment this could offer the single currency something of a boost.
Confidence in the US Dollar, on the other hand, was knocked by a sharper-than-expected contraction in housing starts.
Coupled with a surprisingly weak manufacturing production figure for March this suggested that the world’s largest economy is not in the strongest of states.
Although the atmosphere of global risk aversion persisted, as worries over North Korea and deteriorating US-Russia relations weighed on markets, the ‘Greenback’ struggled to capitalise on this.
While investors remain generally confident that the Federal Reserve will opt to raise interest rates again before the end of the year the upside potential of the US Dollar has been limited.
Positive jobless claims figures could offer the ‘Greenback’ a rallying point, though, with the strength of the domestic labour market encouraging a greater sense of confidence.
Nevertheless, if the number of unemployment claims is found to have risen in the last week this may give the EUR USD exchange rate further support.
Current EUR USD Interbank Exchange Rates
At the time of writing, the Euro US Dollar exchange rate was making strong gains around 1.07. Meanwhile, the US Dollar Euro exchange rate was slumped in the region of 0.93.