Euro rises further in French election relief rally
The euro remained robust on Wednesday morning, poised to gain for a fifth consecutive day after centrist Emmanuel Macron won the first round of the French presidential election.
The euro strengthened 0.09 per cent, or 10 basis points, to 1.0936 as of 11.50 am, compared with 1.0926 late Tuesday. On Tuesday, it hit a five-and-a-half-month high.
Investors seemed to have increased their bets on the presidency of market favourite Macron, who is set to face far-right anti-EU candidate Marine Le Pen in a runoff election on May 7, analysts said.
“The ‘relief rally’ in the euro since the first round of the French presidential election has further exacerbated the recent breakdown in the relationship between the US dollar and euro exchange rate,” said Jonathan Loynes, an analyst at Capital Economics. “Indeed, had the previous relationship been sustained, the euro would have been hovering close to parity in recent weeks.”
He expected the divergence of the two currencies’ values to increase further in the near term if Macron is to duly elected the French president.
The British pound pulled back after previous gains, down 0.05 per cent to 1.2836 in the morning session.
In the meantime, the Chinese yuan weakened.
The onshore yuan in Shanghai traded at 6.8878 against the US dollar , down 0.08 per cent, or 52 points, from the previous day.
The offshore yuan in Hong Kong traded at 6.8899 per US dollar, weaker by 0.03 per cent, or 19 points.
Earlier on Wednesday, the People’s Bank of China set the yuan’s mid-point rate against the US dollar at 6.8845, down 12 points or 0.02 per cent from the previous fixing rate.
Traders are allowed to trade up to 2 per cent either side of the reference rate for the day.
The Japanese Yen dropped 0.12 per cent, or 13 points, to trade at 111.21.