Euro surges, yen dives as French election fears abate

Mon Apr 24, 2017 4:05pm EDT
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By Sam Forgione

NEW YORK (Reuters) - The euro surged against the U.S. dollar and the yen sank on Monday on relief over Emmanuel Macron's victory against anti-euro nationalist Marine Le Pen in the first round of France's presidential elections.

The euro was last 1.2 percent higher against the dollar at $1.0855, not far from the 5-1/2-month high of $1.0935 it reached after the initial indications from the Sunday vote gave victory to Macron, as predicted by weeks of polling.

The same polls showed Macron defeating Le Pen by as much as 30 percentage points in two weeks' time, suggesting players can buy back into the currency. The euro's session high briefly put the currency up about 2 percent against the greenback.

Sunday's outcome reduced the prospect of an anti-establishment shock on the scale of Britain's vote last June to quit the European Union and the election of Donald Trump as U.S. president.

The euro's dip from its session high likely indicated profit-taking rather than doubts about a Macron victory over Le Pen in the second round, said Richard Franulovich, senior currency strategist at Westpac Banking Corp in New York.

"The news of Macron winning is now priced in," he said. "The risks of a disintegration of the euro have been removed."

Strategists at French bank Credit Agricole said their positioning measures showed the euro had been bought for most of the last week, suggesting that many players had already closed previous short bets against the currency.

As markets globally were comforted by the results of the French vote, investors abandoned the perceived security of the yen. The euro was last up 2.1 percent against the Japanese currency at 119.39 yen EURJPY= and the dollar was up 0.8 percent against the yen at 109.92 yen JPY= after touching a nearly two-week high of 110.62.   Continued...

FILE PHOTO: A picture illustration taken on January 18, 2011, shows a 1 euro coin on one U.S. dollar banknotes.  REUTERS/Kacper Pempel/Illustration/File photo