The euro increased compared to the dollar on Monday due to indications that France’s far-right would not secure enough seats for a majority in legislative elections.
Recent pressure on the single currency was due to concerns that Marine Le Pen’s National Rally could win and implement high-spending policies that may lead to conflicts with the European Union.
Although polls suggested that the party might win a majority in the 577-seat National Assembly, it was uncertain if they could secure enough seats for full control.
President Emmanuel Macron called for a “broad” alliance against the far-right in the second round, which would involve run-off votes in constituencies where no candidate won outright in the first round.
On Monday, the euro reached as high as $1.0762.
Meanwhile, the yen held steady against the dollar after the personal consumption expenditures (PCE) index showed a further easing in May, the Federal Reserve’s preferred measure of inflation.
This update created optimism that the Fed might reduce interest rates this year alongside expectations that the Bank of Japan might increase borrowing costs at its next meeting.
Traders are now focused on the upcoming non-farm payrolls data release at the end of the week.
Analyst Taylor Nugent of National Australia Bank stated, “The possibility of a September cut is likely, but several payrolls and consumer price indexes need to pass without causing unease among decision-makers.
This outcome is not guaranteed.”
Market participants are closely monitoring forex developments after Japanese officials warned of intervention to support the yen if it continues to weaken.
Equity markets showed mixed performance after a lackluster end to the week on Wall Street, with all major indexes struggling to maintain early gains and closing slightly lower.
Despite this, markets have seen significant growth so far in 2024, with the S&P 500 gaining over 14 percent.
Business confidence in Japan rose for the first time in two quarters according to the BoJ’s key Tankan survey, contributing to a slight increase in the Tokyo stock market during the morning session.
Other markets such as Seoul, Singapore, Taipei, Manila, Jakarta, and Wellington experienced gains, while Shanghai and Sydney saw marginal declines.
Chinese factory activity shrank for a second consecutive month in June, but this news did not have a significant impact on markets.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: UP 0.3 percent at 39,687.40 (break)
Shanghai – Composite: DOWN 0.1 percent at 2,964.40
Hong Kong – Hang Seng Index: Closed for holiday
Euro/dollar: UP at $1.0756 from $1.0715 on Friday
Dollar/yen: DOWN at 160.87 yen from 160.92 yen
Pound/dollar: UP at $1.2660 from $1.2644
Euro/pound: UP at 84.91 pence from 84.71 pence
West Texas Intermediate: UP 0.4 percent at $81.90 per barrel
Brent North Sea Crude: UP 0.4 percent at $85.35 per barrel
New York – Dow: DOWN 0.1 percent at 39,118.86 (close)
London – FTSE 100: DOWN 0.2 percent at 8,164.012 (close)
dan/dhw
