EUR: Market patience to be tested

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The Euro (EUR) appears to be waiting for cues from French coalition talks, with scenarios ranging from a left-wing government to a market-friendly technocrat prime minister.

The Euro appears to be waiting for cues from French coalition talks, with scenarios ranging from a left-wing government to a market-friendly technocrat prime minister. FX volatility has continued to drop in the meantime but EU politics may revamp it, ING FX analyst Francesco Pesole notes. France faces a rather unusual political stalemate “The market has been inundated with all sorts of scenario analysis after the French election resulted in a rather unusual political stalemate in France.

That is not too much of a stretch, especially in the instances of a technocrat prime minister solution to coalition impasses.” “In France, a coalition that includes a technocrat prime minister would likely require the exclusion of the most left-wing factions of the New Popular Front party, and it remains unclear whether this is feasible in terms of parliamentary arithmetics. That would be the most market-friendly scenario in the near term as it would prevent large spending measures.

 

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