Morning brief for April 24

The biggest winners from the French elections were probably the pollsters who managed to forecast the outcome of the runoff. Let’s pat them on the back; they did a great job having predicted that centrist Emmanuel Macron will face off against far-right National Front leader, Marine Le Pen on May 7. The euro jumped the most in a month in Tokyo session. Exchange rates across the trading desk moved sharply in the thin liquidity conditions. The yen retreated; volatility ebbed, and gold slumped significantly; most of the major currencies opened with the gaps.

Source: Bloomberg.com

Then, we saw a gap filling across the trading desk. EUR/USD tumbled to 1.0820 from 1.0917 hit in the early trading hours. Towards the end of the week, the single European currency may extend its losses as European Central Bank’s ultra-loose stance is set to remain unchanged at the upcoming monetary policy meeting.

USD/JPY was one of the biggest gainers after the French election results were published. The pair rallies to 110.60, then retraced to 109.80 as traders turned to rising tensions on the Korean peninsula once French election tumult disappeared. There is talk that North Korea may test an intercontinental ballistic missile or even nuclear device tomorrow celebrating the 85th anniversary of the founding of its military forces. The yen may flex its muscles throughout the day; it may extend its gains to at least 108.85 (near 200-day MA and 50% Fibo level traced from last year low).

Aussie fell from its earlier high of 0.7585 to 0.7535. It may slide further towards 0.7520 (100-day MA). An additional drop may come after Trump delivers more details on his pro-growth and tax policies.

The British pound was also a loser of the Asian session. It dropped to 1.2778 after rallying to 1.2845. UK PM minister Theresa May will likely have to negotiate new EU-UK terms of cooperation/trade with a сlose-knit, team minded Merkel/Macron team. And these two EU leaders will be the hard nuts to crack. The economic calendar for the pair is light today.

Loonie gained some strength in Tokyo morning. USD/CAD dipped to 1.3460 on the session. There is a scope for extension its gains. Oil prices recouped of last week’s hefty losses as the OPEC-led committee was said to back prolonging supply cuts. Crude oil futures will be vulnerable this week as Trump is set to sign several executive orders on energy and the environment this week which would make it easier for the US to develop energy on and offshore. In the preceding weeks, US production and inventory growth was the major headwinds for oil prices.

Anastasia Mileshkina