Key points:
On Monday, the euro rose following the first round of France’s snap election, which put Marine Le Pen’s far-right National Rally (RN) party in the lead.
However, the margin was smaller than initially projected. This development came as a relief to markets concerned about potential expansionary and unsustainable fiscal policies from a stronger far-right presence.
Marine Le Pen’s RN party won the first round of the parliamentary elections, but with a smaller share of the vote than some polls had predicted.
Marine Le Pen’s far-right National Rally (RN) party won the first round of #France’s parliamentary elections on Sunday, exit polls showed, but the final result will depend on days of horsetrading before next week’s run-off https://t.co/4QUrzCOwXk pic.twitter.com/hykVvO3Q9U
— Arab News (@arabnews) June 30, 2024
This result led to a modest rise in the euro, with EUR/USD trading at $1.0737, up 0.24%, after touching a one-week high of $1.0749 earlier in the session. The underperformance of RN reduced fears of aggressive fiscal policy, thereby supporting the euro.
The rise in the euro had a slight downward effect on the dollar, with the dollar index (DXY) dipping 0.02% to 105.70. This decline was also influenced by U.S. inflation data showing a cooling in May, which bolstered expectations for a Federal Reserve interest rate cut later in the year.
Picture: Euro on the rise, trading at 1.07483 on the VT Markets app.
The Japanese yen faced challenges, declining 0.05% to 160.93 per dollar. This drop followed revised data indicating a greater-than-expected economic contraction in the first quarter, potentially leading to a cut in the Bank of Japan’s growth forecasts and affecting the timing of future interest rate hikes.
The yen has depreciated over 12% this year due to significant interest rate differentials with the U.S.
Also read: Japanese yen nears 38-year low as markets eye intervention and US inflation data
In China, the yuan in the offshore market (USDCNH) rose slightly by 0.02% to 7.2981 per dollar. However, economic data revealed continued struggles, with manufacturing activity declining for the second consecutive month in June and services activity hitting a five-month low. These figures underscore the need for further stimulus as the Chinese economy grapples with regaining momentum.
The current market sentiment reflects cautious optimism for the euro, tempered by ongoing concerns about economic stability in Japan and China. The trajectory of inflation and economic data through the summer will be crucial in determining the likelihood of a Federal Reserve rate cut in September.
Start trading now — click here to create your live VT Markets account.
Education
Company
FAQ
Promotion
Risk Warning: Trading CFDs carries a high level of risk and may not be suitable for all investors. Leverage in CFD trading can magnify gains and losses, potentially exceeding your original capital. It’s crucial to fully understand and acknowledge the associated risks before trading CFDs. Consider your financial situation, investment goals, and risk tolerance before making trading decisions. Past performance is not indicative of future results. Refer to our legal documents for a comprehensive understanding of CFD trading risks.
The information on this website is general and doesn’t account for your individual goals, financial situation, or needs. VT Markets cannot be held liable for the relevance, accuracy, timeliness, or completeness of any website information.
Our services and information on this website are not provided to residents of certain countries, including the United States, Singapore, Russia, and jurisdictions listed on the FATF and global sanctions lists. They are not intended for distribution or use in any location where such distribution or use would contravene local law or regulation.
VT Markets is a brand name with multiple entities authorised and registered in various jurisdictions.
· VT Global Pty Ltd is authorised and regulated by the Australian Securities & lnvestments Commission (ASIC) under licence number 516246.
· VT Global is not an issuer or market maker of derivatives and is only allowed to provide services to wholesale clients.
· VT Markets (Pty) Ltd is an authorised Financial Service Provider (FSP) registered and regulated by the Financial Sector Conduct Authority (FSCA) of South Africa under license number 50865.
· VT Markets Limited is an investment dealer authorised and regulated by the Mauritius Financial Services Commission (FSC) under license number GB23202269.
· VTMarkets Ltd, registered in the Republic of Cyprus with registration number HE436466 and registered address at Archbishop Makarios III, 160, Floor 1, 3026, Limassol, Cyprus.
Copyright © 2024 VT Markets.