EUR/USD slumped nearly 0.5% to the 1.096 area this morning after the French election's projected result showed a clear lead for Macron with 65.5% of the vote, versus Le Pen's 34.5%.
This has probably been due to profit-taking activities or ‘selling on facts’, as the market had priced in a Macron win last week.
Nonetheless, this was the preferred outcome of equity markets. Macron’s election offers stability to Europe’s single market, and strengthens the EU’s position in the upcoming Brexit negotiations. With another area of political uncertainty clarified, investors will now focus on corporate earnings and the cyclical economic tailwind brought about by the broad recovery in global trading.
The crude oil price rebounded sharply from its five-month low, probably due to bargain hunting and profit-taking from short sellers. The WTI oil price jumped nearly 7% since last Friday to the S$46.6 area this morning, with the immediate support and resistance levels at $44.95 and $48.70 respectively. A sharp rebound in the oil price will provide support to Asia’s energy, oil and gas shares, among the worst performing sectors last Friday.
China’s trade balance data will be in focus today, with its exports and imports expected to grow at 10.4% and 18% year on year respectively. This data will have a significant impact on the Hang Seng Index and commodity currencies like AUD.
Heightened market volatility is likely over the election period, this could result in widened spreads. We recommend that you monitor positions carefully, consider the use of appropriate risk management tools and maintain a sufficient account surplus throughout this period.
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