The euro continued its recent ascent thanks to the market-friendly outcome of the German regional election, and previously the French general election. When the single currency rises in a “risk on” market environment, the euro/Japanese yen (EUR/JPY) currency pair is usually the euro pair that tends to outperform as the safe haven yen takes a back seat.
A classic reaction in the markets to the outcome of the French elections. It was widely expected that pro-euro centrist Emmanuel Macron was going to become the new President of France and that he would beat the euro-sceptic Marine Le Pen by a wide margin. And so it proved.
Despite the falls in buck-denominated gold, silver and copper prices, the U.S. dollar hasn't exactly been strong with the British pound/U.S. dollar (GBP/USD) currency pair and EUR/USD remaining bid throughout the week. But the dollar has performed much better elsewhere.
On Tuesday, marks the first full trading day of the new month. Expect to come across lots of “sell in May, go away” headlines. So far, we haven’t seen any significant selling in the stock markets. If anything, the major indices in the United States remain very close to their all-time highs, while in Europe the German DAX has held above its old record high at 12390 while the UK’s FTSE is about 200 points shy of its ATH hit in March.
The U.S. dollar is mixed against majors with gains against the New Zealand dollar, the Japanese yen, the Canadian dollar and the Aussie dollar but weaker against the euro and the British pound. Risk appetite in Europe returned after the restful of the first round of elections in France left Macron and LePen heading into the May 7 deciding second round. The Trump administration presented its tax reform plan and launched a more aggressive trade offensive against NAFTA but anxiety around the dollar surged with the first release of the U.S. GDP in the first quarter coming in below expectations at 0.7%.