France, elections shake the euro. Market volatility remains high

France, exit polls keep market volatility high

A rather eventful opening of the week for the couple EUR/USDmainly influenced by the press releases of the exit polls relating to the French elections which, as much as they would have highlighted the victory of the far right in the first round Marine Le Penthe final outcome expected for next week is not entirely certain, as an absolute majority may not be guaranteed.

From a macroeconomic perspective, the zero variation in the consumer price index for the personal spending core (forecast confirmed at 0.1%) contributed to strengthening investors’ belief that the Federal Reserve could announce an initial monetary easing before the end of the year, a hypothesis which, together with the effect of the French elections, has brought the exchange rate again in the 1.0760 area at the start of the session.

For today, preliminary findings are expected this morning to the consumer price index in Germany (estimates slightly rising from 0.1% to 0.2%), as well as the final measurements relating to the activity of the manufacturing sector in the Eurozone (index SMEs expected unchanged at 45.6 points). In the afternoon, the same data is expected for the United States, whose industrial sector is expected to recover according to the Institute for Supply Management (reference index improving from 48.7 to 49.2 points).

Based on the latest data published over the weekend by China Federation of Logistics & Purchasingindustrial activity among small Chinese manufacturers is expected to grow at the fastest pace since 2021, supported by a sharp increase in overseas orders.

Although some preliminary surveys had highlighted relative weakness in domestic demand and numerous trade frictions, the PMI index manufacturing Caixin/S&P Global it would have risen to 51.8 points in June, compared to 51.7 in April. Similarly to what happened for the other currencies, the rapid strengthening of the euro at the start of the week also affected the pair EUR/CNHwhich reached a price in the 7.8550 area at the opening this morning.