(Bloomberg) — The euro fell to its lowest in a month after French President Emmanuel Macron called a snap vote in the wake of European Parliament elections. Asian currencies declined on the heels of a strong US jobs report from Friday.
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The common currency dropped as much as 0.5%, retreating alongside European equity futures and French bonds. Gains for the far-right in the European Union-wide vote — in line with expectations — led Macron to call a snap legislative ballot for his country in a bid to stop the rise of his rival Marine Le Pen.
German Chancellor Olaf Scholz’s Social Democrats suffered a record rout, though futures on the country’s 10-year debt were little changed after rallying back from a tumble in early trading.
“The EU is facing a historically challenging time with both internal and external ‘cracking’ in systemic issues that require increased – not decreased – cooperation,” according to a Skandinaviska Enskilda Banken AB note to clients. “Difficult negotiations now await” for heads of state and government.
Apart from European politics, it was a rethink on Federal Reserve interest-rate cuts and eased concern about an economic slowdown following last week’s solid US jobs report that shaped trading on Monday.
The yield on 10-year Treasuries advanced for a third day, while the South Korean won and the Malaysian ringgit slid. MSCI’s Asia-Pacific stock index was slightly lower. Traders were also focused on India as Prime Minister Narendra Modi is set to outline portfolios for his cabinet later Monday.
Japan’s Topix rose, with insurance firms leading the advance on expectations of higher fixed-income yields boosting profitability. Markets in China, Hong Kong, Taiwan and Australia were closed for holidays.
The latest US jobs figures highlight a labor market that continues to defy expectations and blunt the impact on the economy from high interest rates and prices.
“We’re still expecting a soft landing in the States — as long as that’s a scenario, I think Asian markets have upside potential,” Lorraine Tan, director of Asia equity research at Morningstar Inc., said on Bloomberg Television on Monday.
Investors may glean more on the Fed’s resolve to ease monetary policy when US policymakers update their forecasts for interest rates on Wednesday. The Bank of Japan’s next announcement is scheduled for Friday, and economists expect it to keep policy steady.
Oil edged higher after a weekly drop with the market still digesting OPEC+’s decision to restore supply, as traders look ahead to a set of industry reports and a Federal Reserve decision on interest rates.
Also in the Middle East, Benny Gantz resigned from Israel’s emergency government and called for elections, criticizing Prime Minister Benjamin Netanyahu over his handling of the war against Hamas. His exit deprives the government of a moderate voice, leaving Netanyahu more reliant on his right-wing coalition partners.
Some key events this week:
UK jobless claims, unemployment, Tuesday
China CPI, PPI Wednesday
Thailand rate decision, Wednesday
India CPI, industrial production, Wednesday
UK monthly GDP, Wednesday
US mortgage applications, CPI, Wednesday
FOMC decision, quarterly summary of economic projections, Fed Chair Jerome Powell’s press conference, Wednesday
Australia unemployment, Thursday
Eurozone industrial production, Thursday
US jobless claims, PPI, Thursday
New York Fed’s John Williams moderates discussion with US Treasury Secretary Janet Yellen, Thursday
Tesla annual meeting, Thursday
Japan rate decision, Friday
U. of Michigan consumer sentiment, Friday
Chicago Fed’s Austan Goolsbee, Fed Governor Lisa Cook, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 6:38 a.m. London time
Nasdaq 100 futures were little changed
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index was little changed
The MSCI Emerging Markets Index fell 0.3%
Japan’s Topix rose 0.9%
Euro Stoxx 50 futures fell 0.4%
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.5% to $1.0748
The Japanese yen fell 0.2% to 157.08 per dollar
The offshore yuan fell 0.1% to 7.2712 per dollar
The British pound was little changed at $1.2715
Cryptocurrencies
Bitcoin fell 0.2% to $69,571.46
Ether fell 0.4% to $3,685.83
Bonds
The yield on 10-year Treasuries advanced one basis point to 4.45%
Germany’s 10-year yield advanced seven basis points to 2.62%
Britain’s 10-year yield advanced nine basis points to 4.26%
Australia’s 10-year yield was little changed at 4.22%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Stephen Kirkland.
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