Euro “Knife” on French Ribs

Analisi Giornaliera - 03/04/2017

French Presidential Candidate Marine Le Pen Ups the Ante

French presidential candidate Marine Le Pen remarked on Sunday that the Euro, which she wants the country to ditch, was like a “knife in the ribs” of the French people. The leader of the anti-immigrant National Front further added that the upcoming election could unfold a "change in civilization".

Euro Holds Ground

Bolstered by the surprise election of Donald Trump in the US and the UK’s vote to leave the European Union, Marine Le Pen is hoping to ride on a similar surge in popular sentiment in France. However, most opinion polls indicate she will lose the race. Le Pen has promised that a government under her would take France out of the EU and its common currency, and slap heavy taxes on companies employing foreigners.

Le Pen is expected to do well in the first round of the presidential vote on April 23 only to lose the final run-off to the more centrist Emmanuel Macron. After ending last week on a weak note, the Euro is holding its ground against the US dollar, and is up around the 1.0672-mark in early Monday trade.

Pace of Chinese Manufacturing Slows in March

The latest survey results show that activity at Chinese factories grew for a ninth consecutive month in March, albeit at a slower pace amid weakness in new export orders, reigniting concerns that the recent manufacturing pickup is losing steam. The Markit/Caixin Manufacturing Purchasing Managers' Index dropped to 51.2 in March, below economist projections of 51.6 and down from the prior month’s 51.7. The index was still above the 50-mark that separates expansion from contraction.

However, the growth rates in output, input and total new orders all dipped in March on a month-over-month basis. Growth in export orders suffered the most, tumbling to a three-month low of 51.9 in March from 53.8 in February. In response, AUDUSD is tumbling on Monday, with the pair breaching the strong support around 0.76220.

US Consumer Sentiment Cools

A widely-followed measure of US consumer sentiment came in lower than expected, according to data released during Friday’s late session. The University of Michigan Consumer Sentiment Index reached 96.9 in March, trickling lower from the preliminary result of 97.6 reported earlier in the month, but still printing above the 96.3 reported back in February. Analysts surveyed by Reuters had forecast the March final figure to remain unchanged from the preliminary one.

In addition, consumers expect inflation to hover around 2.50% over the course of the year, compared with February’s 2.70%. Sentiment has been holding close to its highest levels in over a decade as Americans generally feel buoyed by the further strengthening in the labor market. S&P 500 futures are gaining in early trade, and were last seen around 2360 after trending within a narrow range for over one week.

Russia Records First GDP Growth in 2 Years

After a challenging period of sanctions and rampant inflation, Russia notched an expansion for the first time in two years, providing further evidence that the economy is rebounding from a crippling crisis. According to the Federal Statistics Agency, the country recorded a year-on-year GDP growth rate of 0.30% during the fourth quarter of 2016.

Moscow has been reeling from a two-year economic crisis that was triggered by the plunge in crude oil prices and Western sanctions over Crimea. Russia's economy last experienced growth when it expanded 0.20% in the fourth quarter of 2014. Economists reckon that the return to growth has been largely fuelled by a smaller than expected decline in consumer spending and stronger inventory investment. The USDRUB pair is back on the rebound after the big drop from last week, and is currently hovering just below the 56.000-mark.