European stock markets higher after French elections result. Key euro area data today as the annual ECB forum starts. Dollar on the back foot amidst a very busy week. Yen remains under pressure.
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Welcome to another episode of Global Market Insights, brought to you by XM.com, where we provide meaningful and informative content about the events that affect market trends and shape global markets. It's Monday, July 1st, and this is the Market Common Podcast at XM.com by Hiles Geragalabos. I'm Christina Marujas. France's national rally party confirmed expectations by winning the highest level of support and the first round of the country's parliamentary elections. Ahead of the left-wing new popular Front Coalition, and miles ahead of Macron's centrist alliance, National Rally's leader, Marie Le Pen, has literally won round one of the fight, but nothing has been decided yet as the countdown to the second round and final one of the elections has already started. Le Pen is clearly aiming to achieve a majority by winning 289 seats in the next Parliament and make President Macron's life difficult until 2027, when the next presidential elections are scheduled for. However, the left-wing coalition and Macron's alliance are now weighing whether to support each other's candidates in Sunday's second round, which could prove successful and potentially stop Le Pen's party from achieving the crucial majority. European stock markets have opened in the green today, and the euro has gap higher gains again against the US dollar, as the French opposition party seemingly unified Front against Le Pen has been seen as a positive step. However, should this effort fail and Le Pen's et al. managed to achieve a parliamentary majority, there is scope for significant underperformance of the euro across the board. Amidst these developments in France, the market will have to digest a rather busy schedule, especially in the euro area. The preliminary inflation report from Germany will be published later today, with the Eurozone aggregate figures coming out on Tuesday. There is a small possibility of an upside surprise today, but these inflation prints are unlikely to change the outcome of the July meeting since the European Central Bank Hawks remained very uncomfortable about the June rate cut. As President Lagarde mentioned at the last ECB gathering, the European Central Bank needs to see a plethora of data confirming the disinflation process in order to cut rates again. Interestingly, the annual ECB Forum on Central Banking starts today in Cintra Portugal, with Lagarde holding the introductory speech later today. There will be a barrage of speeches from central bankers over the next three days, including comments from various Fed officials with Chairman Powell participating in a panel discussion tomorrow. The holiday short and week across the pond starts on a high note, with the release of the June ISM Manufacturing Survey with the crucial non-farm payroll report coming on Friday. The key point of discussion though in the United States is still the recent presidential debate and more specifically President Biden's performance. Biden has rife that he could eventually be forced to step down with Vice President Kamala Harris being the front runner to replace him. Despite the ongoing dollar weakness in a barrage of comments from Japanese government officials, the dollar yen pair remains above the 160 yen level. It is evident that the market is testing the Bank of Japan, but the mixed data is not giving the green light to Governor Rivera et al. to respond appropriately using monetary policy. Their intervention remains the other option for the Bank of Japan with arguable results at best. This was the Mark of Common Podcast at XM.com, have a great week. [BLANK_AUDIO]
