Euro Slips as Traders Take Profits on French Election

By Chelsey Dulaney Features Dow Jones Newswires

The euro slid Monday as investors took profits after the weekend's French election outcome, while the dollar firmed ahead of important U.S. economic data.

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The euro was recently down 0.5% to $1.0944, off Sunday's highs of above $1.10. Investors drove the euro to a seven-month high against the dollar after Emmanuel Macron's victory over anti-euro candidate Marine Le Pen in Sunday's French presidential election.

The euro later gave up those gains as investors took profits on the widely anticipated result.

Mr. Macron's win allows investors to refocus on improving European growth and the prospects for policy tightening by the European Central Bank, which should support the euro.

The election outcome also helped boost appetite for riskier assets. The dollar fell against some emerging-market currencies, such as the Korean won and Singapore dollar, but rose against the Mexican peso and Brazilian real.

"Nervous investors, who were shell-shocked by massive upsets related to the Brexit and U.S. presidential votes recently, appeared more willing to test riskier waters, which saw traditional safe-harbors like the Japanese yen and Swiss franc fall overnight," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange.

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The WSJ Dollar Index, which measures the U.S. currency against 16 others, rose 0.3% to 89.98. Investors are looking ahead to important retail sales and inflation data later in the week.

Friday's closely watched U.S. jobs report showed hiring rebounded in April but the pace of wage growth slowed. Analysts said the report supports the Federal Reserve's case for raising interest rates at its meeting next month.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com

The euro slid Monday as investors took profits after the weekend's French election outcome, while the dollar firmed ahead of important U.S. economic data.

The euro was recently down 0.7% to $1.09255, off Sunday's highs of above $1.10. Investors drove the euro to a seven-month high against the dollar after Emmanuel Macron's victory over anti-euro candidate Marine Le Pen in Sunday's French presidential election.

Mr. Macron's win allows investors to refocus on improving European growth and the prospects for policy tightening by the European Central Bank, which should support the euro.

Still, analysts warn the euro will face more political risks in the months ahead, including next month's French parliamentary elections. Italian elections, which must be held by May 2018, could also see anti-euro candidates gain ground in a country beset by economic problems.

"Threats to the euro will not simply disappear just because the euro-safe candidate won the election," said James Chen, head of research at Forex.com. "If Le Pen is able to gain sufficient influence in the French National Assembly, troubles for President Macron and the euro may potentially have just begun."

The WSJ Dollar Index, which measures the U.S. currency against 16 others, rose 0.5% to 90.13. Investors are looking ahead to important retail sales and inflation data later in the week.

Friday's closely watched U.S. jobs report showed hiring rebounded in April but the pace of wage growth slowed. Analysts said the report supports the Fed's case for raising interest-rates at a steady pace.

Fed-funds futures, used by investors to bet on the U.S. interest-rate outlook, show a 83% chance that the Fed raises rates at its next meeting in June, according to CME Group data. Higher rates typically support the dollar by making U.S. assets more attractive to yield-seeking investors.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com

(END) Dow Jones Newswires

May 08, 2017 17:08 ET (21:08 GMT)