Markets Relieved after First Round in French Elections

The Euro rose 2% higher in Asia to its highest level since Mid-November.

Euro jumped to a five-month high after the first round of voting in the French presidential election on Sunday.

Centrist Emmanuel Macron topped the rating, going into the final round as a favorite against far-right Marine Le Pen.

Investors were worried that Jean-Luc Me’lenchon, the far-left candidate, might beat Mr. Macron, which would have given voters a choice between two Eurosceptic candidates.

The Euro rose 2% higher in Asia to its highest level since Mid-November before giving up same ground.

CEO of the financial research consultancy Opimas in Paris, Octavio Marenzi said:

“Macron will be reassuring to markets, with his pledge to lower corporate taxes and to lighten the administrative burden on firms. He basically represents continuity.”

Other leading experts at research consultancies share the same view, reasoning that Macron would be a safe candidate who would solidify the future of the EU.

As the results poured in on Sunday night, the euro rose 2% against the dollar to $1.09395, the highest level since November 10, the day following the U.S. presidential election. It slightly fell back later to $1.0855.

The investors tend to flock to yen when high-risk levels are perceived; euro rose 3% against it at a five-week high before coming down a bit to 119.50 yen.

The euro jumped 1.2% higher against sterling at 0.8480 pence.

Tokyo-based forex director at Credit Agricole, Yuji Saito said, “The market’s initial reaction was stronger than expected. It means that many people had their guard up ahead of the vote,” explaining investor’s nervousness that resulted in rallying the euro.

The former investment banker, Mr. Macron, served as the economy minister under President Francois Hollande. Although he’s relatively inexperienced – never served as an MP – polls see him becoming the next president of France.

The head of rates at Rabobank, Richard McGuire said:

“The assumption now is that centrist voters will rally around Macron, denying Le Pen the presidency and hence this will effectively be a pro-establishment, pro-European result.”

Francois Fillon, defeated by Mr. Macron in Sunday’s election, has already endorsed him, and other senior political figures are also rallying behind Macron, including the former Prime Minister Alain Juppe.

Mr. McGuire warned that nothing should be taken for granted and anything could happen in the second round on May 7, especially after the Brexit vote and election of Donald Trump.

Mr. Macron (Pro-European candidate) remained a socialist finance minister until the autumn, after which he quit to start “En Marche” movement, which proposed tax and spending cuts.

His rival in the final round, Ms. Le Pen is anti-EU; her campaign being focused on jobs, security, and threat from Islamic extremism.