Electoral anticlimax

Macron wins, investors yawn

It would have been a surprise of cosmic dimensions had Emmanuel Macron, with an opinion poll advantage of 2/3 to 1/3 over Marine Le Pen, failed to win the French presidency in yesterday's election. The euro is therefore broadly lower this morning: Having bought the rumour, investors sold the fact.

In the fortnight following the first round of voting the euro enjoyed a politically-driven relief rally, showing the other major currencies the way and strengthening by 1.5% against sterling. Investors were buying into the idea that a moderate president Macron would be positive for EU cohesion and the single currency.

As news of his victory emerged overnight the euro did open higher in the Far East but quickly ran into resistance as the buyers of the last two weeks took profits by reducing their long positions. The euro is still 1% above its pre-first-round level but down by half a cent compared with Friday morning. It is a dozen ticks higher against the US dollar, which received no help whatsoever from a perfectly respectable set of US employment data.

Good numbers but no cigar

US nonfarm payrolls went up by 211k in April and unemployment fell from 4.5% to 4.4%. Both of those numbers were better than forecast but they did nothing to change the expectation of an increase in the federal funds rate next month. Futures prices indicate a 75% chance of a hike.

Including revisions to previous months nonfarm payrolls showed 20k more new jobs than analysts had predicted. Those analysts had also forecast that unemployment would be up to 4.6%, which it wasn't. The problem was partly that average hourly earnings growth slowed from 2.7% to 2.5% (inflation is close behind at 2.4%) and partly that none of it did anything to alter the interest rate outlook. The numbers brought nothing new to the table or to the dollar.

Jobs growth in Canada was not as strong as expected but unemployment did fall from 6.7% to 6.5%. That, together with a 6% jump in oil prices, helped the Loonie to move 0.7% higher against the pound. The Norwegian krone did even better, rising by 0.9% on the back of the recovering oil price.

Slowing Chinese trade

The most important of today's ecostats came out before the European day got going. A double-digit decline in building permits rattled the Australian dollar but it was unmoved by figures showing a slowdown in the growth of China's international trade.

Chinese exports were up by an annual 14.3% in April, with imports rising 18.6%. The equivalent numbers for the previous month were 22.3% and 26.3%. Australian building permits were down by -13.4 on the month and by -19.9% in the year to March. German factory orders rose by an annual 2.4% in March, rather less than the 4.7% increase reported for February.

Yet to come: Halifax house prices, Euroland investor confidence, Canadian housing starts and, tonight, Australian retail sales and business confidence.