Le jour de gloire est arrivé pour l'euro

Travail terminé

Investors' nightmare about a run-off between two anti-EU extremists failed to come to pass. In the first round of the French presidential election Emmanuel Macron and Marine Le Pen made it through to round two. As far as investors are concerned that's job done for President Macron. So buy euros.

M. Macron might not have been financial markets' first choice. He is, however, very much the lesser of two evils where the preservation of the single currency and the European Union is concerned. Moreover, the pollsters are united in predicting that he will win comfortably when the French electorate is presented with a binary choice between him and Mme Le Pen in a fortnight's time. Investors therefore did not have to think twice about marking up the euro when markets opened in the Far East this morning.

It started two cents higher against the US dollar and the pound. Ahead of the London session it was up by a cent and a half from Friday morning's levels. There was competition though: the Swedish krona and Hungarian forint did just as well and the Swiss franc was not far behind.

Sales sag

Flushed with enthusiasm for the forthcoming general election investors did not look too closely at the rather rubbish UK retail sales data on Friday. That attitude was encouraged by Monetary Policy Committee member Michael Saunders who, in a speech on Friday, dangled the prospect of a rate increase.

Whilst Mr Saunders was keen to insist that he would not preordain his decision at the MPC meeting on 12 May he did observe that there is upward pressure on inflation. He finished by saying that "It is natural for policy to respond to the changing outlook if needed, consistent with our low inflation remit". So he isn't about to vote for a cut.

Those retail sales figures, though, did not look supportive. With Easter switching from March to April they were never going to be punchy: a -0.2% monthly decline was forecast. But the actual -1.8% drop would not need to be repeated very often to reawaken concern about the UK economy.

All about France

The balconies of Paris are peppered with TV financial reporters vying for the best backdrop to their coverage of yesterday's election. They should at least have an attentive audience today: there is just about nothing on the quotidian agenda to catch the eye of investors.

Rightmove's index of UK house asking prices showed a monthly increase of 1.1%, leaving the average price 2.2% higher on the year. Later this morning the CBI's Industrial Trends Survey of manufacturing orders is expected to come in at 5, three points behind the 8 reported for March. Other data cover German business confidence, Canadian wholesale sales and just about nothing else.

As for the euro, yesterday's election has gone a long way towards allaying investors' concerns. Just don't mention Greece. Or the political situation in Italy.