Euro gains bit after Macron’s win

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Euro gains bit after Macron’s win

One euro coin is seen in this illustration.

The euro gained a bit in early trade on Monday after French President Emmanuel Macron defeated far-right rival Marine Le Pen in a comfortable Sunday defeat, a result that was largely expected by markets and political analysts.

The euro opened higher at $1.0840, last trading at $1.0807, up 0.12% from Friday's close, but couldn't break from a two-year low last week.

The currency was up 0.14% against sterling to 84.22 pence, hitting a three-week peak in early trade.

With 97% of votes counted, Macron was on course for a solid 57.4% of the vote, interior ministry figures showed. In his victory speech he acknowledged that many people had voted for him only to keep Le Pen out, and he promised to address the sense of many French that their living standards were slipping.

The markets are assured that the European dynamic will continue as a result of Macron's victory. Frederic Leroux, a member of the Carmignac investment team, said that the euro could be the main beneficiary of the election, which was still flirting with two-year lows against the dollar in the short term.

The markets may be negatively affected by the decision to impose a Russian oil embargo, which would exacerbate inflationary pressures and economic slowdown in Europe. The euro, along with most of its major peers, has been battered by a downward march by the dollar that is boosted by rising U.S. Treasury yields. Markets are repositioning themselves for an aggressive rate hike from the U.S. Federal Reserve.

The dollar index was at 101.08 on Monday morning, just shy of a two-year peak of 101.33 hit on Friday.

The pound was slightly softer against the dollar at $1.28275, after falling 1.4% on Friday to its lowest since November 2020. Weak sales and consumer confidence data and Bank of England comments earlier in the week signalled a possible slowdown in the expected upward movement of British interest rates.

The Japanese yen has been the most affected by rising U.S. interest rates, with Japan keeping its benchmark yields pinned down. On Monday morning, the dollar was a bit firmer on the yen at 128.63.

The dollar has gained 11% on the yen so far this year. Last week's 129.4 was the highest for the dollar-yen in 20 years.

The Aussie dollar was under pressure at $0.7233, its lowest against the dollar in a month, while the price of the digital currency was hovering around $39,500, little changed over the weekend.