Euro plunges to one-month low as French President calls snap election

10 Jun 2024

The Euro experienced a significant decline on Monday, impacted by political uncertainty following the far-right's advances in the European Parliament elections on Sunday. This prompted French President Emmanuel Macron to announce a snap national election.

The single currency dropped to a one-month low against the Dollar of $1.0748 and at the time of writing, was down 0.35% at $1.0764.

In addition, the Euro edged down 0.33% against Sterling to hit a two-year low of 84.51 pence and also declined 0.22% on the Swiss Franc to a seven-week low of 0.9639 Francs. 

“The election results over the weekend from the EU largely showed a pick up in support for the right wing parties, generally what was expected, but the surprise element is that Macron has reacted by calling a snap election, so that makes the market more nervous,” stated senior currency analyst at MUFG, Lee Hardman.

“That's reinforced the sell off in the Euro that we saw at the end of last week, and the other factor on top of that is the US payrolls report was very strong, which increases the risk of a hawkish Fed policy signal when they meet on Wednesday.”

The Federal Reserve will wrap up its two-day policy meeting on Wednesday. Data at the end of last week revealed that non-farm payrolls surged by 272,000 jobs last month, surpassing expectations from a Reuters poll, which had anticipated 185,000 jobs.

Markets are currently pricing in 36 basis points of Federal Reserve cuts for this year, down from the previous expectation of nearly 50 basis points before the release of the jobs data.

Furthermore, the greenback rose 0.15% against the Japanese Yen at 157 Yen after rising 0.7% on Friday following the payrolls data.

With Sterling holding steady at $1.2722, the Dollar index, measuring the currency against six peers, rose 0.08% at 105.15 at the time of writing. Reuters reports that it reached a one-month high of 105.3 in early trading