Friday May 12, 2017 - 17:30:59 GMT
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French Election Settled, But New Trump Controversy Blooms
John M. Bland, MBA
Macron Victory In France Greeted With Relief By Markets Pro-EU adherents in Europe greeted the overwhelming victory of center-left and pro-EU candidate Emmanuel Macron over Far-right candidate Marine Le Pen in Round Two (Final Round) of the Presidential selection process with relief at the start of the week. The result puts to bed any medium-term worries about a French exit from the EU. The fear has been that the U.K. "Brexit" decision could spread to the Continent, but so far this has not been the case. The other worry was that polling errors evident in the Brexit and Trump votes could pop up in France. They did not. The French polls were remarkably accurate.
Those in the markets hoping for a surge in EURUSD after the Macron victory were disappointed as that result had been priced in beforehand. The trading adage "buy the rumor, and sell the fact" worked when markets opened early Monday in the Far East. The EURUSD fell immediately as EURUSD was overbought and positions were exited. Furthermore, U.S. 10-yr note prices fell (yields rose) as pre-election flight to safety hedges via purchases of U.S. treasuries were unwound. With this uncertainty out of the way, Fed Funds futures are now pricing in near certain (90%+ odds) for a FOMC +25bps rate hike at its June 14 meeting. We suggest that traders also continue to keep a close watch on equities. The yield on the 10-yr note was pivoting the psychological 2.40% level before easing on Friday.
POLITICAL SURVEY: On June 8, 2017, the U.K. will hold House of Commons Elections.
Who do you feel will form the next government?
Trump Firing OF FBI Chief Comey Having Little Impact on Markets President Trump created a political firestorm when he unexpectedly fired FBI Director James Comey late Tuesday. Some fear that this controversy could delay the Trump heathcare, tax reform and economic stimulus programs. His political opposition will be doing all it can to drag out any investigations. They say an indefinite delay could weigh on equity prices. We will see.
Amazing Trader EVENT RISK Calendar:
Tue 16 May
08:30 GB- CPI
09:00 DE- ZEW Survey
12:30 US- Housing Starts & Permits
13:15 US- Industrial Production
Wed 17 May
08:30 GB- Employment
14:30 US- EIA Crude
Thu 18 May
1:30 AU- Employment
08:30 GB- Retail Sales
Fri 19 May
12:30 CA- Retail Sales & CPI
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.
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