Friday May 5, 2017 - 18:02:26 GMT
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French Presidential Election Looms Over Another Sunday
John M. Bland, MBA
Markets Price In Macron Victory For Sunday Presidential Vote Far-right candidate Marine Le Pen and center-left candidate Emmanuel Macron were the top two finalists from Round 1 of the French presidential elections two weeks ago. This Sunday, May 7 sees Round Two (Final Round) of the Presidential selection process. Macron has consistently been polling at a prohibitive 20% advantage over LePen. A final Presidential debate took place on Wednesday. According to post-debate polls, viewers felt that Macron had outperformed LePen.
The two frontrunners mark a remarkable turning point for France. In a stunning rejection of the status quo in French politics, neither of the two mainstream parties — the Socialists on the left nor the Republicans on the right — made it to the final round, a first in France’s history. Le Pen heads the far-right National Front party, while Macron has never held elected office and represents En Marche, a brand new center-left party. At this juncture a Macron victory has been priced in by the markets.
Fed Bias To Tighten Policy At June Meeting As expected, the Fed held key rates steady last Wednesday. In its policy statement, the FOMC said that the current U.S. economic weakness is likely only transitory. By saying this it has left open the OPTION to hike interest rates in June should economic conditions warrant such a decision. I feel strongly that their bias is to raise rates in June. Markets continued to price in a June hike afterwards. On the other hand, by stating that they feel the current economic weakness in only transitory, they have signaled that if the current weakness persists that it could impact policy decisions in the immediate future.
The April U.S. employment on Friday was a mixed bag. Payrolls (after revisions) were in line with expectations and the unemployment rate fell. The key Average Hourly Earnings report missed expectations for a +0.30% rise when the prior months data downward revision is taken into account. In sum, while the data did not preclude a rate hike in June, its was not the proverbial "smoking gun". The FOMC will still see the May jobs data before they decide to tighten or not in June. Keep in mind their bias is to tighten.
Amazing Trader EVENT RISK Calendar:
Tue 9 May
21:00 NZ- RBNZ decision
Wed 10 May
14:30 US- EIA Crude
Thu 11 May
08:30 GB- Output & Trade
11:00 GB- Bank of England Decision
Fri 12 May
12:30 US- Retail Sales, CPI
14:00 US- Prelim University of Michigan Survey
Be sure to refer daily Global-View to see the continuously UPDATED Economic Calendar and the Forex Forum for the complete list of key items (actual data, selected charts, etc.) as they are released.
John M. Bland co-founding partner www.global-view.com
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