A sigh of relief has washed over FX markets. French Presidential candidate Emmanuel Macron won the first round of the French elections on Sunday. He is widely expected to win the run-off vote on May 7 with a wide-margin thanks to support from defeated candidates.
Equity traders in Asia and Europe liked the results and stock markets are up across the board. Gold prices plummeted. Gold dropped from Friday’s close of $1,285.30/oz. to a low of $1,265.50 in Asia, bounced back to $1,277 45 in Europe and then retreated as New York started the day.
EURUSD gapped higher in early Asia trading, spiking to 1.0934 from 1.0700 at Friday’s close. It has since settled into a 1.0820-1.0875 consolidation range. As French election risks dissipate, traders will soon focus on President Trump’s tax reform plan. On Saturday, he tweeted “big TAX REFORM AND TAX REDUCTION will be announced on Wednesday”.
EURUSD was not the only currency that gapped in Asia. USDJPY rallied from 109.08 to 110.62 and has held on to the majority of those gains in early New York trading. The improved risk tone as French election fears fade combined with the prospect for higher US rates in June is supporting the currency pair.
GBPUSD gave back early Asia gains and is trading near the overnight low. GBPUSD peaked at 1.2866 in Asia and is now sitting at 1.2768.
The Australian dollar outperformed its Kiwi cousin. Both currencies rallied overnight but NZDUSD gave back nearly all of its gains while AUDUSD stayed firm.
USDCAD declined and hit a low of 1.3410 in early New York trading. It has since bounced to 1.3445. Broad US dollar weakness is being offset by lingering concerns from Friday’s softer than expected inflation data, weak oil prices and trade concerns.
USDCAD Technical outlook:
The intraday USDCAD technicals are bearish with the overnight break of the steep uptrend line at 1.3460 which suggests further losses to 1.3360 on a move below 1.3410. For today, USDCAD support is at 1.3410 and 1.3360. Resistance is at 1.3480 and 1.3525
Today’s Range 1.3380-1.3480
Chart USDCAD 30 minute