Tim Seymour, CNBC personality and manager of the Triogem Asset Management firm, tweeted out last night that the euro is going to 1.12. This on the backs of Emmanuel Macron’s win over Marine Le Pen on Sunday by about two percentage points. While the polls got it right as to who would go into the second round, markets did what they do best: knee-jerk on the news.
The euro quickly headed to 1.09 before weakening to 1.08 once European markets opened.
Barclays Capital said on Sunday in a joint note from Paris and London that they expect Macron to beat Le Pen handly on May 7. But that a hung Parliament will weigh on politics. The euro, therefore, judging by what’s quickly become market consensus this morning, doesn’t have much upside until the second round of elections are through.
A stronger euro shouldn’t worry Vanguard FTSE Europe (VGK 66,41 +0,11 +0,17%) investors too much. The hottest economy there, Germany, has survived on a stronger euro than what they have now. That Vanguard ETF has been outperforming the SPDR S&P 500 (SPY 515,71 +2,85 +0,56%) and the iShares MSCI Japan (EWJ 70,92 +0,27 +0,38%), which started the year as the little darling of the developing world. Europe, with its ongoing identity crisis and monthly run-ins with jihadists, is beating them both. Rothschild was right: you really do need to buy when there is blood in the streets.
The euro is now above its 200-day moving average against the dollar. French (EWQ 41,41 -0,19 -0,46%), German (EWG 31,75 -0,12 -0,38%) and even the FTSE 100 in the U.K are all up by more than 2%, signaling that the twilight of the euro is no longer near.
With the polls getting this election so on-the-money, investors holding the big European ETFs or euro-denominated assets may want to keep tabs on the polls. Any indication that Macron is ahead by a wide margin will send the euro to Tim Seymour levels of 1.12 before election day in two weeks. The opposite will hold if nationalistic, euro-skeptic tendencies prevail among non-Le Pen voters who cast their vote for the National Front.
Also worth noting, the European Central Bank will hold its regular policy meeting on Thursday. Markets expect it to keep policy rates unchanged. The ECB is resisting German pressure to move away from its QE program, which like the U.S. program has been busy buying up derivatives and other debt instruments that no one in their right mind wants to hold.
Bank lending growth still remains subdued, according to various reports in the financial press, even as the ECB continues to throw them life lines. Investors will be watching Thursday for signs that the ECB is ready to taper or even raise rates, officially pricing in a Macron win in France. Euro Has Very Little Upside
Tim Seymour, CNBC personality and manager of the Triogem Asset Management firm, tweeted out last night that the euro is going to 1.12. This on the backs of Emmanuel Macron’s win over Marine Le Pen on Sunday by about two percentage points. While the polls got it right as to who would go into the second round, markets did what they do best: knee-jerk on the news.
The euro quickly headed to 1.09 before weakening to 1.08 once European markets opened.
Barclays Capital said on Sunday in a joint note from Paris and London that they expect Macron to beat Le Pen handly on May 7. But that a hung Parliament will weigh on politics. The euro, therefore, judging by what’s quickly become market consensus this morning, doesn’t have much upside until the second round of elections are through.
A stronger euro shouldn’t worry Vanguard FTSE Europe (VGK 66,41 +0,11 +0,17%) investors too much. The hottest economy there, Germany, has survived on a stronger euro than what they have now. That Vanguard ETF has been outperforming the SPDR S&P 500 (SPY 515,71 +2,85 +0,56%) and the iShares MSCI Japan (EWJ 70,92 +0,27 +0,38%), which started the year as the little darling of the developing world. Europe, with its ongoing identity crisis and monthly run-ins with jihadists, is beating them both. Rothschild was right: you really do need to buy when there is blood in the streets.
The euro is now above its 200-day moving average against the dollar. French (EWQ 41,41 -0,19 -0,46%), German (EWG 31,75 -0,12 -0,38%) and even the FTSE 100 in the U.K are all up by more than 2%, signaling that the twilight of the euro is no longer near.
With the polls getting this election so on-the-money, investors holding the big European ETFs or euro-denominated assets may want to keep tabs on the polls. Any indication that Macron is ahead by a wide margin will send the euro to Tim Seymour levels of 1.12 before election day in two weeks. The opposite will hold if nationalistic, euro-skeptic tendencies prevail among non-Le Pen voters who cast their vote for the National Front.
Also worth noting, the European Central Bank will hold its regular policy meeting on Thursday. Markets expect it to keep policy rates unchanged. The ECB is resisting German pressure to move away from its QE program, which like the U.S. program has been busy buying up derivatives and other debt instruments that no one in their right mind wants to hold.
Bank lending growth still remains subdued, according to various reports in the financial press, even as the ECB continues to throw them life lines. Investors will be watching Thursday for signs that the ECB is ready to taper or even raise rates, officially pricing in a Macron win in France.