Macron wins in landslide...
Week Commencing Monday 8th May 2017
FRANCE: Macron defeats Le Pen in crucial election victory for the EU!
Centrist candidate Emmanuel Macron has decisively won the French presidential election, defeating far-right candidate Marine Le Pen.
Macron won by 66.06 percent to 33.94 percent to become, at 39, the country's youngest president. Despite the wide margin of the final result, Le Pen’s score nonetheless marked a historic high for the French far right. Even after a lacklustre campaign that ended with a shocking performance in the final TV debate, she was projected to have taken almost 11 million votes, double that of her father, Jean-Marie Le Pen, when he reached the presidential run-off in 2002.
The anti-immigration, anti-EU Front National’s supporters asserted that the party had a central place as an opposition force in France. Marcon’s win poses some problems for the British Brexit negotiations, however has been widely praised by all aspects of the UK political spectrum.
Macron maintains his harsh Brexit stance, indicating that the four pillars are indivisible and is known to be a particular proponent of removing the City of London’s “passporting” rights to the EU.
UK: PMI "Hat-Trick" points to reversal in UK GDP fortunes!
UK factories had their best month in three years in April, the strongest signal yet that manufacturers are enjoying a boost from the pound's fall after the Brexit vote and an improving global economy.
This, coupled with strong services and construction data completed a UK “Hat-Trick” of PMI’s for the month, stunning analysts who predicted the Brexit pain to kick in.
The services sector drew a reading of 55.8 in the month, significantly higher than the 55.0 reading in March, and the expected 54.5 forecast by economists. These PMI numbers point to a GDP growth of 0.6 percent for the second quarter, which would be double the 0.3 percent growth announced by the ONS last week.
This is clearly good news for the UK, with the Conservatives capitalising on this as proof of their economic record. Risk remains on the horizon however as the rhetoric continues to escalate between Brussels and London!
Sterling (GBP) - Sterling remains robust after the French elections with all eyes now focusing on the UK General Election. We expect range bound trading this week, perhaps with the exception of any big announcements during the BoE Inflation Report. Expect Sterling to potentially test the 1.30 on cable and break through, while 1.20 on GBP/EUR remains a harder target.
US Dollar (USD) - The Greenback continues to suffer, losing ground against both the Euro and Sterling. That said, with key levels of Dollar support in sights, we expect solid range bound trading this week. Should we see an incredible Retail Sales numbers, we could see some reversal in its fortunes.
Euro (EUR) - The Euro has had a small relief rally on the back of Macron’s win, however we expect markets to now return to normal. With little in the way of European data, eyes now focus on UK/German elections and ongoing Brexit news.
Economic Calander for the Week
We have a quiet week for the UK with the Bank of England MPC meeting scheduled to hit the wires on Thursday. We expect no change in monetary policy, however the Inflation Report will be an interesting watch.
We expect focus to be on the first quarter GDP which generally disappointed markets and the rise in inflation. Manufacturing Production for March is also expect on Thursday, with a print of -0.2 percent expected.
We start the US week with Job Openings for March, widely expect to fall from 5.743 million to 5.670 million. We then shift our attention to PPI on Thursday, which should come in at 0.2 percent versus the -0.1 percent we saw last month.
Finally, Friday sees the all-important CPI and Retail Sales numbers. We expect inflation to come in at 0.2 percent in March, which retail sales should post 0.5 percent (core) and 0.6 percent (normal) for April.
We have an extremely light week for Europe with Mario Draghi’s speech on Wedensday the only event of note. Expect any Brexit related statements to impact Sterling, while any hint of cutting QE will give the Euro further cause to strengthen.