Market Drivers March 06, 2017
Europe and Asia
AUD: AU Retail Sales 0.4% vs. 0.4%
EUR: EU Retail PMI 49.9 vs. 50.1
North America
USD: Factory Orders 08:30
The euro went for a ride on the first trading day of the week popping to a high of 1.0640 in early European trade only to fall below the figure a few minutes later after Alain Juppe ruled out any possibility of running for President during the current election cycle. Mr. Juppe who served as Prime Minister from 1995-1997 is a member of the Republican party and was seen as a palatable replacement for scandal embattled Francois Fillion. The news clearly disappointed investors who had hoped that Mr. Juppe could peel away some of the conservative support from Marie Le Pen. Ms. Le Pen's support remains at unwavering 27% while her opponents continue to jockey for positioning.
Although Ms. Le Pen trails badly in the second round runoff polling (losing 40% to 60% in today's daily poll to Mr. Macron) investors remain very leery of trusting the polling numbers. With both Brexit and Trump win fresh in their minds investors are highly concerned that Ms. Le Pen could somehow eke out a victory that could put EZ second largest economy into the grip of a populist rebellion. The euro found some support last week at the 1.0500 level after Mr. Macron appeared to have consolidated support from center-left, but the pair remains hostage to political news as risk of fracture, albeit small continues to concern the market.
With no major data on the US docket today, the market should continue to take cues from equities and fixed income arenas. USD/JPY, despite very hawkish talk from Janet Yellen, remains under pressure testing the 113.50 level in morning London dealing. If risk aversion flows pick up in US dealing today, the pair could unwind all the way to 113.00 as the day progresses as markets continue to ignore the bullish US fundamentals.