ForexLive Asia-Pacific FX news wrap: EUR/USD gapped higher (not a huge gap)

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EUR/USD
opened for trade in very early Asia time (just New Zealand active)
around 15-20 points higher than where it finished up late on Friday.
This is not an epic gap up, but hey, its what we got. The news of
impact for the euro was the result of the first round of the election
in France, where the far-right National Rally is on track to win
around 34%

the
left-wing alliance with 28.1, a good performance for them
President
Emmanuel Macron’s centrist alliance came trailing behind on around
20.3%, this is a stunning loss

Without
getting too deeply into French politics, the next, and final, round
of voting is on July 7. If the results are similar there are a number
of potential scenarios, including a hung parliament, an alliance of
parties to block the far-right from reaching government, or a win for
Le Pen’s rightists. There are many permutations, feel free to argue
politics in the comments.

However,
why did the euro pop? Again, feel free to argue politics, but the
likely outcome as seen by investors is a more market-friendly
government regardless of a far-right or centrist alliance, win. A
far-right win is, prima facie, market friendly. Whereas an alliance
between the centre and left is expected to see leftists dial back less market
friendly policies in order to govern.

I’m
not sure I am comfortable with either of those narratives, I think a
period of instability is most likely but so far that’s not the
dominant theme.

USD/JPY
is little changed on the session. It had risen back above 161.00 in
early Tokyo trade but that’s been unwound. We aren’t talking
big moves though.

Hong
Kong markets
were closed
today
for a holiday, Hong Kong Special Administrative Region Establishment
Day. This was the day in 1997 when Communist China resumed control of
Hong Kong from the UK when the lease expired.

Elsewhere
in the region, South Korea posted its largest monthly trade surplus in
nearly 4 years.

China’s
1-year interest rate swap fell
to its lowest since June
of
2020. Yields on 10- and 30-year Chinese government bonds hit new record lows.Over
the weekend the official PMIs were poor; manufacturing stayed in
contraction while services expanded as a slower rate. Today we had
the private, Caixin/S&P manufacturing PMI, which was better. More
in the points above on this.

Bitcoin rose back above 63500 USD:

This article was originally published by Forexlive.com. Read the original article here.