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French Presidential Elections and the Euro

Europe’s second largest economy is facing the first round of presidential elections on April 22nd. Incumbent Nicolas Sarkozy and the main opposition leader Françios Hollande are expected to emerge as the candidates for the second round, held on May 6th.  

Update: According to data leaked to French bloggers, Hollande got 28-29% of votes while  Sarkozy got around 26%. They will challenge the presidency in the second round. Turnout was 80%.  The first round may already have an impact on the euro, setting the stage for a bigger impact in the second round:

Hollande has already stated his opposition to the fiscal compact negotiated by Sarkozy and Merkel, and he remains in the leading position to become the next president. His election might add to uncertainty and may hurt the euro.

Yet anything can happen between the two leading candidates until May 6th, and a win of Hollande over Sarkozy in the first round will likely be shrugged off by the markets. A win of Sarkozy will be surprising, but doesn’t mean anything until the second round, and will likely be received in the same manner.

Sarkozy is quite unpopular in France, and there’s a slim chance that he will come in only third, behind extreme right wing Marine Le Pen. In this case, Hollande will be considered the next president already after the first round, as many moderate Sarkozy supporters will likely vote for Hollande. In such a case, the euro might drop.

Update: Marine Le Pen didn’t succeed in getting more votes. On the other hand, left wing candidate  Jean-Luc Mélenchon managed to get 13-14% of votes, showing that France is leaning to the left.

Update 2: Real results show a different picture regarding the 3rd and 4th places: Le Pen got nearly 20% of votes and  Mélenchon only 11%. This is according to 75% of the votes.

The updates results add to uncertainty.

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.