This week again and it is French politics which is creating uncertainty for the Euro as the financial scandal surrounding Conservative Presidential candidate Francois Fillon continues to unfold. It has been reported that his wife Penelope has been paid more than €800,000 of public money whilst his two children also received €84,000 on assistants’ salaries whilst they were studying, allegedly for work not carried out. The pair are expected to be indicted for fraud later this week under criminal charges and if found guilty would see them both serve time.
Mr Fillon had been favourite to win the French election but now discredited and almost out of the race it just leaves 39 year old newcomer and former banker Mr Macron as the likely front runner closely followed by Front National leader Marine Le Pen.
The French electoral system sees two rounds with the top two candidates from the first round then going through to a final vote in the second round. The first round takes place 23rd April with the final round taking place 7th May 2017. The implications of a Le Pen victory on both the EU and the Euro are not to be underestimated and there is likely to be major currency volatility in the run up and likely Euro weakness.
The National Front party wish to see return to the French Franc and a transition period of 6 months has already been mooted before bringing the currency back in to force. This could see a depreciation of the new French Franc by as much as 20%.
With so much going on in these markets there hasn’t been a more important time to be in communication with your account manager to be kept in the loop with these kind of developments.
Greece is yet again under the spotlight as it approaches the next tranche of its €86 billion bailout. The next payment of €7.5 billion by Greece is due in July which it won’t be able to meet as things stand. It is the lack of agreement between Greece, EU creditors and the International Monetary Fund (IMF) which is creating the uncertainty. Germany are calling for deeper austerity cuts whilst the IMF have said that Greece’s debt is not sustainable and debt relief should be offered. Once again and after all these years a Grexit could be back on the cards and this prospect is likely to see added pressure on Euro exchange rates. Greek bonds have recently climbed over 10% which signals there is once again a very real chance of a Greek default.
Brexit, elections in Europe and Greeces debt woes are just some of the issues faced within the Eurozone this year. If you do have a Euro requirement, keeping in regular contact with your broker will help you to make the most of any spikes in the market. Call us on 01494 725 353 or email me at firstname.lastname@example.org if you have any questions regarding todays report.
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