The first round of the French elections begin on Sunday but can investors take comfort in Macron leading in the polls?
This weekend and early Monday morning could prove pivotal for the strength of the Euro over the coming weeks, with the first round of France’s general election kicking off on Sunday. On Monday morning we should have the result confirmed and then the top two candidates from the vote will then go head-to-head in the final round of voting which will be held 2 weeks later. As many of our readers will be aware, it is rumour rather than fact and uncertainty that is probably what causes the most market volatility.
With the outcome of this election so up in the air, I think that we could see the Euro lose in value next week.
Macron and Le Pen are currently leading the polls, but as we have seen in recent political events, the polls are often way of the mark. This, coupled with the fact it is believed over 40% of voters are undecided still, means that we could be in for a shock result early next week and therefore some Euro weakness. Macron is currently out in front of Le Pen, hence the Euro regaining some ground during yesterday’s trading, but if this changes then the question is how the market will react?
France is once again in mourning today after ISIS has claimed responsibility for a shooting that killed a police officer and left two others wounded in Paris. The election seems to have taken a bit of a back seat this morning in light of the event, but there is a possibility that last night’s act of terror could sway voters who head to the polls this weekend.
Those with a Euro exposure may wish to put a plan in place that could protect you from any market volatility. Those selling Euros may benefit from booking a forward contract, which allows you to lock in a rate of exchange by paying a small deposit of the total amount you are looking to transfer. To give you an example of recent market movement, a Euro sale of €200,000 this time last week could have gained you as much as an extra £2,100. Euro buyers on the other hand can take advantage of a limit order, which allows you to specify a rate of exchange you wish to achieve and our systems will automatically purchase the currency on your behalf once this level is reached. This contract is ideal if you are looking to benefit from any sharp spikes in the market and are willing to take the gamble.
Looking further ahead to next week there is also an ECB interest rate decision and press conference from Mario Draghi on Thursday afternoon. With interest rates at 0% it is unlikely that we will see any change in stimulus measures, but Draghi’s press conference could give us some hints for the future and may also have an impact on the value of the Euro.
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