Euro Leads Regional Currencies Higher After Macron Debate Win

2017-03-21 08:26:00

Talking Points:

Euro leads regional FX higher after Macron debate triumph
British Pond may not find lasting follow-through in UK CPI
US Dollar remains at the mercy of Fed officials’ commentary

The Euro led a broad-based rally in European currencies after a poll showed that Emmanuel Macron won the first French presidential debate. An Elabe survey showed 29 percent thought the centrist was most convincing. Left-wing candidate Jean-Luc Melenchon scored 20 percent while the center-right Republicans’ Francois Fillon and eurosceptic Marine Le Pen tied for third place with 19 percent.

Regional markets rejoiced at the prospect of withholding power from insurgent forces in the second-largest Eurozone economy. The result comes a week after anti-EU populists were defeated in a presidential election in the Netherlands.

UK CPI headlines the economic data docket. The headline year-on-year inflation rate is expected to rise to 2.1 percent, the highest since November 2013. An upbeat result may offer a further lift to the already buoyant British Pound but lasting follow-through may prove hard to come by. The BOE has signaled its intent to look through near-term price growth acceleration, meaning firm figures may not translate into a hawkish monetary policy shift.

Fed-speak returns to the spotlight later in the day as comments from Bill Dudley, Esther George and Loretta Mester – Presidents of the Fed’s New York, Kansas City and Cleveland branches, respectively – come across the wires. Dudley’s middle-of-the-road pedigree may make his remarks more market-moving than those of the typically hawkish Mester and George. If he echoes Chicago Fed President Evans’ cautious tone, the US Dollar may continue to decline. A clear pro-tightening bias may offer the greenback a lift however.

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