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French Election: Landslide Macron victory prompts muted initial reaction from euro

The widely-expected outcome of the French presidential election came to be on Sunday evening, as pro-euro centrist Emmanuel Macron was projected to become the new President-elect of France. Macron easily defeated his rival, anti-euro candidate Marine Le Pen, by a substantial margin, prompting some to declare that the election outcome was a clear vote of confidence for European unity.

Election Projections

Early projections based on exit polls Sunday evening showed Macron beating Le Pen by approximately 30 points, with Macron at around 65% to Le Pen's 35%. As further results came in on Sunday night, the lead narrowed and then fluctuated, but only marginally.

Le Pen’s New Movement

These initial results prompted Le Pen to give a concession speech soon after voting had ended and exit polls had begun to show Macron's potential landslide victory. In her speech, Le Pen promised to "profoundly transform" her National Front party into a new political movement that would "lead the fight" in June's French parliamentary elections. Even as she conceded defeat to Macron, Le Pen proclaimed an historically positive outcome for the far-right, indicated that her work and that of her newly-transformed political movement would be far from over.

Macron’s Fight for France and Europe

For his part, Macron gave a rather subdued initial victory speech that addressed the many deep divisions among French citizens. He promised to address those divisions and represent a unifying force that would fight against inequalities and defend both France and Europe, as he claimed that “our civilization is at stake.”

Macron was swiftly congratulated by several world leaders, including German Chancellor Angela Merkel and UK Prime Minister Theresa May. US President Donald Trump tweeted his sentiments, writing, “Congratulations to Emmanuel Macron on his big win today as the next President of France. I look very much forward to working with him!”

Market Reaction

Unlike the immediate aftermath of the first round of the election two weeks ago, when Macron’s win prompted a sharply bullish wave of relief for the euro, markets reacted to Macron’s ultimate victory in a much more subdued manner as of Sunday evening. As mentioned previously, the euro has been in a sharp rally since that first-round outcome, and much of the relief in the markets regarding a widely-expected Macron victory had already been expressed and priced-in. And while Macron’s projected margin of victory on Sunday can indeed be considered very substantial, it is not too far off what public polling shortly prior to Sunday’s voting had already suggested.

In early Asian session trading on Sunday evening, the euro saw comparatively muted gains with only a very minor initial gap-up against two major counterparts – the US dollar and Japanese yen. While this could change going into Monday’s European session, the unsurprising outcome of the election is not likely to provoke any unusually large reaction.

Going forward, the euro could certainly be further supported by Sunday’s election results, especially if Macron succeeds in rallying France to support his pro-euro agenda. At the same time, however, Le Pen and her newly-proclaimed political movement could pose an increasingly troublesome challenge for Macron and help weigh on the euro, especially as June’s parliamentary elections approach in several weeks’ time.

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