The euro moves by the winds of the French opinion polls. What’s next?
Here is their view, courtesy of eFXnews:
EUR/USD got a lift from Francois Bayrou’s decision to ally himself with Emmanuel Macron rather than stand in the French presidential contest himself.
That’s lifted the Oddschecker odds of a Macron victory back up to 39% this morning, reversing a three-week downtrend. It’s narrowed the OAT/Bund spread by about 5bp too, though that’s down to lower French yields rather than higher German ones. At 27bp, Bunds still provide very limited support for the Euro and relative real yield differentials are only marginally higher this morning.
There will be further twists and turns in the election race and EUR/USD remains a short-term sell even if the longerterm outlook is heavily skewed the other way.
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