Macron's victory does not give euro a second boost

What was initially expected has actually happened. Emmanuel Macron has become the new president of France. In a duel with Marine Le Pen, Macron won with more than 7 percent of the vote yesterday, May 65. The currency markets take the news for notice.

Macron's profit should not be a surprise. After the primaries, two weeks ago, the polls were largely in his favor. Interestingly, the result was even better than the polls had originally predicted. Because Macron's victory was more or less certain, the euro barely reacted to the final result last night.

Resistance at $1,10
In recent weeks, the euro has already pre-sorted considerably on the public transport marketevictory from Macron. Unlike Le Pen, Macron is in favor of a European currency. The idea of ​​Le Pen to exchange the euro for the franc, Macron labeled as nonsensical. This political approach supports the euro. With Macron's victory close at hand, the euro/dollar exchange rate has risen to just below the $1,10 mark in recent weeks. This is significantly higher than the parity predicted for a Le Pen win.

Last week the euro was already the best performing G10 currency. On Friday, in the run-up to the second round of the French elections, the euro touched its highest level in 6 months (against the dollar at $1,0964). The limit of $1,10 was not broken then. Also this morning the price is still below this limit.

dollar strength
The reason that the euro/dollar exchange rate encounters resistance has to do with the dollar strength. US inflation is close to target, according to the Fed. Unemployment fell by 0,2 percent in April. Analysts expect the Fed to raise interest rates again in June. That gives the dollar a little more support. For the following months, at least one interest rate increase is expected, but a second increase may follow before the end of the year. 

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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