The European single currency, euro recovered some ground against the dollar on Monday, February 20, after weekend talks aimed at finding a leftist unity candidate for France’s presidential election showed little sign of progress.
The common currency rose around 0.1 percent and 0.3 percent respectively against the dollar and yen in early trade in Europe EUR= EURJPY= while the dollar also rose 0.1 percent to 113.08 yen, having given back some of its overnight gains. JPY=
News that Socialist Benoit Hamon and hard-left rival Jean-Luc Melanchon were discussing cooperation in their bid for the presidency weakened the euro and supported the yen on Friday.
Investors believe such a tie-up could either backfire and propel far-right, anti-globalization candidate Marine Le Pen into the Elysee palace or succeed and land France with a far-left president pursuing deficit-boosting economic policies.
But policy proposals outlined by Melanchon on Sunday underscored the gap he would have to bridge with Hamon to find a common platform for the April and May polls also helped boost the euro.
“If they did unite then any outcome would be a bad outcome from the market’s point of view,” said Richard Benson, co-head of portfolio investment with currency fund Millennium Global in London.
“It was what caused the risk-off move on Friday, although the interesting thing was it seemed to play out more on dollar-yen than the euro. In general the market does seem very nervous.”
Millennium’s Benson said Trump’s State of the Union speech in 10 days time might be crucial for those trades, Reuters reports.
Trade on Monday will be cooled by the absence of U.S. markets for the Presidents Day holiday.
