Investors nervously watch wayward French election
Volatility in the euro has climbed to its highest level since before the Brexit vote as French voters struggle to make up their minds ahead of voting next weekend
The possibility of far-right French presidential candidate Marine Le Pen – who has promised to pull France out of the euro and reintroduce the Franc – winning in second round voting remains slim, but investors are increasingly concerned about next Sunday’s first round of voting.
A recent surge in the polls for far-left candidate Jean-Luc Mélenchon, has observers worrying that Le Pen’s strongest opponent, Emanual Macron, could be eliminated before the second round.
“The risk is that the far left and the far right make it into the second-round run-off,” the Financial Times quoted City Index strategist Kathleen Brooks as saying. She added that “although this outcome still has a slim probability, the market is showing signs of nervousness about a shock result from the French election.”
Should second-round front runner Macron or center-right François Fillon prevail, however, the eurozone would benefit from positive investor sentiment. JPMorgan analysts forecast the demise of radical candidates Le Pen and Mélenchon could send the euro up to US$1.15 from its current level of US$1.06.