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This coming 7th of May 2017 will be France’s awaited final round of the election between Marine Le Pen (National Front) and Emmanuel Macron (En Marche!) for the presidency. This historical event is worth to keep an eye on as Le Pen’s victory could spark “Frexit”, as anticipated by political experts, considering United Kingdom’s “Brexit” and President Donald Trump’s reign over the United States of America.
France Within The European Union
Almost 15% of the total European GDP depends on the French economy. Foreign investment in France economy in 2015 recorded US $44 million (which was the US $55 million in 2012), in comparison with US $532 million total foreign investment in Europe.
The Matters
Major issues in France’s coming election will be varied depending on different conditions, that includes how to control the nation’s high unemployment rate and the country’s bond with (and responsibility within) the European Union. Other issues consist of the strength of community support for the nation’s immigration, welfare system, industrial and defense policy.
French Election impact on Currency Markets
The EUR has damaged against the USD following the results of the Brexit vote and the presidential election of U.S as a political gesture that voters chose a nationalistic and locked model between two of the world’s major countries. Since then, ‘exit’ is a major threat for the European Union as the option first spread through different medias with ‘Frexit’.
In May 2016, the EUR was in yearly highs of 1.16 but quickly escalated down because the U.S. Federal Reserve suggested a rate hike might happen at the end of the year and also the U.S. growth indicators exposed a regaining from lower points.
If Le Pen wins the race, this could put descending pressure on the EUR as she is committed on restoring the franc as well as a likely ‘exit’ from the EU. On the other hand, a win by another candidate might strength the EUR to retrieve its position, however, depends on the result.
French Election impact on Gold
Gold will possibly continue to allure investors to take the advantages of a worst-case situation if France exits the EU. The destiny of the USD is also considered as another key factor with a possibility of the pro-growth strategies declared by president Donald Trump enhancing the American economy.
French Election impact on Oil
OPEC (Organization of the Petroleum Exporting Countries) agreement to reduce oil manufacture has been the key factors of oil prices this year. Although the reduction has been an achievement with OPEC and some non-OPEC countries, remarkably Russia, higher scale manufacture in North America intimidates the success of the agreement if it is increased higher than the past six-month duration.
Crude prices will not face any major changes following the results of the French presidential election, however, it could be debilitated if the result threatens international markets.
Summary
The French people is about to have one of the biggest presidential elections in their history with an uncertain result, which has amplified the levels of nervousness and one of the most awaited events of 2017 around the world. The French voting system enhances the uncertainty even after ending of the two rounds of the election and makes it hard to predict a result.
During the past period, the EUR/USD pair has already been surging as well as indices Germany 30 and France 40. For the next days until next week, we are advising all traders to stay updated with the market trends in order to take advantage of the profitable opportunities!
