Euro surges as Macron and Le Pen eyed as winners of French poll

The euro jumped to a five-month high against the US dollar, as Emmanuel Macron emerges as presidential favourite.

French presidential election candidate for the En Marche! movement Emmanuel Macron raises the arms at the Parc des Expositions in Paris, on April 23, 2017, after the first round of the Presidential election. (AFP PHOTO / Eric FEFERBERG)

The euro jumped sharply against other global currencies on Sunday as polls closed in the first round of France’s presidential election, with centrist former economy minister Emmanuel Macron in the lead according to initial projections.

A poll released by Ipsos as voting finished put Mr. Macron at 23.7 per cent, heading into the second round on May 7 against far-right candidate Marine Le Pen’s 21.7 per cent.

The euro rose to its highest level against the dollar since November, to as high as $US1.093, before settling to $US1.088, up 1.4 per cent from Friday’s close.

Against the Japanese yen, the euro spiked to as high as 120.5 in early trading in Asia Pacific, up 3.4 per cent.

Second-round polling suggests Mr Macron commands a large lead against Ms Le Pen, with around 60 per cent of respondents backing the former economy minister.

“This is the most market-friendly outcome,” said Vincent Juvyns, a strategist at J.P. Morgan Asset Management. “A Macron-Le Pen contest in the second round should give Macron a significant majority.”

The two other major contenders for the top two places, centre-right François Fillon and far-left Jean-Luc Mélenchon, each polled 19.5 per cent.

Investors feared the potential that the second round could feature Mr Mélenchon and Ms Le Pen, both of whose policy platforms would strain the eurozone’s common policies.

Political risks, particularly around the French election, have been a major concern for markets this year. Some analysts and investors believe that the result of the first round may be a trigger for increased appetite for European assets.

“International investors have been burned a bit in the past few years, so they’ve been reticent to get involved,” said Kevin O’Nolan, portfolio manager at Fidelity International. “But the perception that the centre, the establishment is reasserting itself is good for investors.”

Investors were more cautious about the election following the surprise results of last year’s U.K. referendum on EU membership, and the U.S. Presidential election.

“The most important thing is that it shows the polls are reliable, and that should increase the confidence in the second round results,” said Anais Boussie, economist at Credit Suisse.

“You should see Le Pen defeated by around 20 or 30 points — with Brexit and Trump you had a gap of more like five points,” she added.

Dow Jones Newswires