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Euro slumps against Swiss franc after French elections

Euro freewheels after surprise French legislative elections
Euro freewheels after surprise French legislative elections Keystone-SDA

The euro slumped on Monday morning against the franc, and to a lesser extent the dollar, in the wake of an electoral upset in France.

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Marine Le Pen and Jordan Bardella’s Rassemblement National lost the second round of legislative elections to the Nouveau Front Populaire. The far-right was also beaten by President Emmanuel Macron’s Ensemble party. At 08:46, the euro had lost 0.22% against the franc at 0.9687 EUR/CHF and 0.11% against the dollar at 1.0828 EUR/USD.

“The risk premium on the euro seems to have faded to some extent already, and we don’t expect any sudden bouts of weakness against the dollar given the absence of a clear majority,” says Claudia Panseri, head of investment in France for UBS’s Global Wealth Management unit.

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If the left were to succeed in imposing its views, the single currency could sink below $1.05. A government made up of moderates should keep the EUR/USD pair around 1.08, she added.

The franc has benefited from a flight of capital to greater security, even though the euro has already made up much of its initial losses against the dollar, notes Ipek Ozkardeskaya, from Swissquote.

“In the space of a weekend, France has gone from an advantage for the far-right to a victory for the far-left,” continues the Gland-based online bank’s analyst, for whom the coalition led by Jean-Luc Mélenchon’s Insoumis has done too much to allay investors’ fears about the stability and predictability of French politics.

Translated from French by DeepL/mga

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