Europe is freaking out over the rise of the people.
The euro experienced a decline on Monday following a notable gain by far-right parties in the European Parliament elections. The political shift led French President Emmanuel Macron to announce an unexpected national election. This added layer of political uncertainty in France contributes to a tense atmosphere in global markets, already poised for a significant week with key economic events.
The euro fell by 0.4% against the U.S. dollar, reaching a low of $1.0733, marking its weakest point since May 9. Additionally, it dropped 0.4% against the British pound to 84.52 pence, approaching a near two-year low, and similarly declined by 0.4% against the Swiss franc, hitting a seven-week low of 0.9648 francs.
Following French President Emmanuel Macron's decision to call a snap parliamentary election the euro fell broadly, while French bonds and stocks were hit hard. Macron’s decision came after he was trounced in a European Union vote by the far right https://t.co/AauLpcLL9f pic.twitter.com/2XufwNctiQ
— Reuters Business (@ReutersBiz) June 10, 2024
Market analysts pointed to the surprise call for a French national election as a primary factor in the euro’s depreciation. Lee Hardman, a senior currency analyst, highlighted the market’s nervous reaction to the unexpected political developments in France.
Concurrently, the U.S. dollar gained strength following a robust U.S. employment report for May, which showed higher-than-expected job additions and wage increases. This led to a reduction in market expectations for imminent rate cuts by the U.S. Federal Reserve.
Daily Market News with FXOpen – 10 June 2024
🔸Euro Slips to One-Month Low as Macron Calls French Election;
🔸Asian Markets Mixed Following Hotter-than-expected US Jobs Report;
🔸Oil Edges Higher After Weekly Loss as Focus Turns to Fed Rates.#stockmarket #OilPrices #oilindustry pic.twitter.com/D6Jq5tVdt8— @FXOpenBroker (@FXOpenBroker) June 10, 2024
The upcoming U.S. consumer price index (CPI) for May is highly anticipated and could significantly influence the Federal Reserve’s policy decisions, especially with its two-day meeting coinciding with the release of this data. Market predictions hinge on this report, with outcomes likely to affect the U.S. dollar’s strength and influence broader market trends.
Paula Comings, head of foreign exchange sales at a U.S. bank, suggested that a softer inflation report might bring some market relief and potential weakening of the dollar, though within a tight range. Conversely, higher inflation could pressure the euro further and impact emerging market currencies disproportionately.
Euro slips to one-month low as Macron calls French election
On Monday, the euro experienced a decline after French President Emmanuel Macron announced a surprise election following a significant defeat in the European Union vote against the far-right. Meanwhile, the dollar pic.twitter.com/MiG9vFdHSg
— Chris Wealth Management Pvt Ltd (@chriswealthman1) June 10, 2024
Looking ahead, the Federal Reserve is expected to update its economic and interest rate projections during this meeting, potentially adjusting expectations for future rate cuts.
In Asia, the focus shifts towards the Bank of Japan, which is expected to maintain its interest rates but may also adjust its approach to bond buying.
In the realm of digital currencies, Bitcoin showed a modest increase, adding another layer of complexity to a week full of critical economic developments and decisions.
- The euro dropped 0.4% against the dollar, reaching its lowest level since May 9, after far-right gains in the European Parliament elections led French President Macron to call a snap election.
- This political shift in France adds to market uncertainty during a week filled with significant economic events, including U.S. inflation data and central bank meetings.
- The U.S. dollar strengthened following a positive jobs report, which showed higher-than-expected job and wage growth, leading to revised expectations regarding Federal Reserve rate cuts.
- Key upcoming data includes the U.S. consumer price index for May, which will influence the Fed’s policy decisions during its meeting this Wednesday.
- The dollar index rose slightly, and the Bank of Japan is expected to maintain its interest rates at its upcoming meeting, while Bitcoin experienced a modest increase.
RM Tomi – Reprinted with permission of Whatfinger News