Currencies drop as French election looms

The euro edged lower against the US dollar on Friday as investors braced for yesterday’s first round of a tight French presidential election.

The euro was down 0.2% against the dollar at $1.0693, close to the session’s low. “Traders understandably look content to flatten their books and ride out the weekend’s events from the sidelines,” Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, said.

W hile the risk of a knee-jerk move one way or the other remained high, the euro was still on pace for its best week in 11 against the dollar.

An upbeat Purchasing Managers’ Index survey from France and polls showing centrist Emmanuel Macron still in pole position ahead of the vote helped settle investors’ nerves.

“We did see a decent amount of unwinding of some hedges,” said Brad Bechtel, managing director FX at Jefferies in New York. “Hedges have appreciated so much in the last week or so that some folks are comfortable taking a little bit off.”

However, the options markets still suggests investors are concerned about the chances of strong results for far-right candidate Marine Le Pen and far-left rival Jean-Luc Melenchon.

The dollar, which has been pressured lately by weaker-than-expected economic data and worries about the Trump administration’s ability to pass tax and fiscal stimulus legislation, rose on Friday as traders squared up positions ahead of the weekend. The dollar index was up 0.18% at 99.954.

Picture: Bloomberg BLONDE AMBITION. French right-winger Marine le Pen is seen as a dark horse in the French elections. She wants to end the EU and get rid of the euro. The IMF and World Bank warn a victory by her is a bigger danger to world trade than US protectionism...