Daily Market Update

Flat markets ahead of French elections. Mixed data for EU and UK

April 21, 2017


The U.S. Dollar is trading in mixed ranges, tasting a bit of recovery against the Yen and some of its European counterparts. With stock indexes flourishing across the globe overnight, the safe-havens are losing some ground. Nevertheless, markets may stay relatively quiet ahead of the biggest risk event in April: the French elections with their first round of voting taking place Sunday. The unfortunate incident in Paris yesterday where a police officer was killed did not sink the Euro, as it’s often the case after any chaotic situation that takes place in the continent.

Purchasing Managers’ Index data will be released at 9:45AM and it is expected to be a higher reading than last month at 53.8 in manufacturing and 53.2 for the services sector. Existing Home Sales are slated to be out at 10AM with estimates of expansion after a contraction of (-3.7%) in February. We will monitor these figures to see if they inspire any positive movement for the greenback or foment further losses if underwhelming. It is worth noting that CAD has weakened by 1.6% this week after WTI Crude fell 4.5% in price.



The Euro is almost 1.0% better against the buck after a week of anxiety over politics and positive economic indicators. The Euro-zone’s PMI grew in April to its highest level in six years at 56.7. Currently, France is where manufacturing has expanded the most and surprised economists.

We believe that once the election results are revealed, Marine Le Pen will be one of the top two candidates moving forward to the second round. This in turn may put downward pressure on the Euro next week, especially since the ECB has talked down potential monetary tightening and frankly, any attacks or occurrences where ISIS claims involvement only adds to the possibility of Le Pen’s rhetoric changing some moderate minds as the campaign towards May 7th, when a president will ultimately be chosen.



The Pound has been on a strong appreciating run, reaching its best level in 5 months against the U.S. Dollar this week. It gained another 2.0%, but the bleeding for the buck stopped after UK retail Sales revealed their worst quarterly dip since 2010.

While Prime Minister Theresa May readies herself to campaign for a conservative majority in parliament, the forces of the economy are not providing much to the argument for a “hard Brexit.” Britain seems greedy in believing that a stronger anti-EU stance will help in negotiations, but they may have another thing coming if the campaign towards June 8th sparks more debate in the population, which will be highly affected once European businesses start retreating capita and business opportunities.

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