Euro Rises on French Vote, China Eyed After PMI: Markets Wrap

(Bloomberg) — The euro climbed on signs Marine Le Pen’s far-right party was poised to claim victory in the first round of France’s legislative elections less comfortably than some polls projected.

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Initial election results showed Le Pen’s National Rally in front of President Emmanuel Macron’s centrist alliance, though possibly without the votes than it needs to secure an absolute majority after a second round of voting next week. A very strong showing for Le Pen’s party would have increased the odds of expansive fiscal policy, further muddying the outlook for the common currency.

“A scenario where NR could rule on its own now looks less likely,” and that boosted the euro as concerns on fiscal largess eased, said Rodrigo Catril, a strategist at National Australia Bank in Sydney. “We now need to wait and see how the second round shapes up and if other parties can cobble together a united opposition to RN.”

Japanese stocks rallied, while futures contracts in Hong Kong slipped. Investors will have a keen eye on Chinese stocks after a report showed factory activity contracted for a second straight month in June. The private Caixin China manufacturing PMI release is also scheduled for release later Monday.

Elsewhere in Asia, South Korean currency traders will be on tenterhooks amid fears of an increase in volatility as the won’s new trading hours come into effect. Confidence among Japan’s large manufacturers rose, data on Monday showed, leaving the door open for the central bank to consider an interest-rate increased later this month. Yield for the nation’s 10-year bond rose 2.5 basis points.

One in three economists surveyed by Bloomberg predicts a rate hike at the next gathering. The yen dropped to the lowest level since 1986 last week, prompting some analysts to flag a heightened risk of a rate move as Governor Kazuo Ueda has pledged to watch the yen’s impact on inflation closely.

Economy Cooling

As the quarter ended in the US on Friday, a swath of data indicated the world’s biggest economy is cooling without lasting damage to consumers. US consumer sentiment declined by less than initially estimated on expectations inflationary pressures will moderate and the Fed’s preferred inflation gauge marked its smallest advance in six months. Treasuries edged lower Monday.

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In commodities, oil was little changed as traders gauged China’s economic outlook and geopolitical risks in Europe and the Middle East.

Key events this week:

• Australia retail sales, Monday

• Japan Tankan report, Monday

• China Caixin manufacturing PMI, Monday

• Eurozone S&P Global Eurozone Manufacturing PMI, Monday

• Indonesia CPI, Monday

• India HSBC Manufacturing PMI, Monday

• UK S&P Global / CIPS UK Manufacturing PMI, Monday

• US construction spending, ISM Manufacturing, Monday

• ECB President Christine Lagarde speaks, Monday

• Bundesbank President Joachim Nagel speaks, Monday

• RBA issues minutes of June policy meeting, Tuesday

• South Korea CPI, Tuesday

• Eurozone CPI, unemployment, Tuesday

• Fed Chair Jerome Powell speaks, Tuesday

• ECB President Christine Lagarde speaks, Tuesday

• China Caixin services PMI, Wednesday

• Eurozone S&P Global Eurozone Services PMI, PPI, Wednesday

• Poland rate decision, Wednesday

• US FOMC minutes, ISM Services, factory orders, trade, initial jobless claims, durable goods, Wednesday

• ECB President Christine Lagarde speaks, Wednesday

• New York Fed President John Williams speaks, Wednesday

• Sweden’s Riksbank issues minutes of June meeting, Wednesday

• Australia trade, Thursday

• Brazil trade, Thursday

• UK general election, Thursday

• European Union provisional tariffs on China EVs set to be introduced, Thursday

• ECB publishes account of June’s policy meeting, Thursday

• US Independence Day holiday, Thursday

• Philippines CPI, Friday

• Taiwan CPI, Friday

• Thailand CPI, international reserves, Friday

• Eurozone retail sales, Friday

• France trade, industrial production, Friday

• Germany industrial production, Friday

• ECB President Christine Lagarde speaks, Friday

• Canada unemployment, Friday

• US unemployment, nonfarm payrolls, Friday

• New York Fed President John Williams speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.3% as of 10:13 a.m. Tokyo time

• Hang Seng futures fell 0.4%

• Nikkei 225 futures (OSE) rose 0.5%

• Japan’s Topix rose 0.5%

• Australia’s S&P/ASX 200 fell 0.4%

• Euro Stoxx 50 futures rose 0.9%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%

• The euro rose 0.3% to $1.0749

• The Japanese yen was little changed at 160.92 per dollar

• The offshore yuan was little changed at 7.2989 per dollar

Cryptocurrencies

• Bitcoin rose 2.7% to $63,546.51

• Ether rose 2% to $3,482.94

Bonds

Commodities

This story was produced with the assistance of Bloomberg Automation.

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