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Market News – Euro sank; Stocks Dip on EU political uncertainty


Economic Indicators & Central Banks:

The Euro dropped sharply due to political uncertainty after French President Emmanuel Macron called a snap election, influenced by far-right gains in the European Union vote.
Eurosceptic nationalists made the biggest gains in European Parliament elections on Sunday, an aggregated exit poll showed, although centre, liberal and socialist parties were set to retain a majority.
German Chancellor Olaf Scholz’s Social Democrats suffered a record rout as well!
Markets in China, Hong Kong, Taiwan, and Australia were closed for holidays.
Japan: GDP shrank at an annual rate of 1.8% in Q1, slightly better than the initial estimate of a 2.0% contraction.
Automaker Scandal: Several major automakers, including Toyota Motor Corp., are involved in a scandal over improper vehicle model tests. Government officials raided Honda Motor Co.’s Tokyo headquarters and Suzuki Motor Corp. Raids are expected soon on Mazda Motor Corp.
US: Market expectations for Fed rate cuts this year decreased to 36 basis points from nearly 50 basis points. The likelihood of a rate cut in September dropped to around 50% from 70%.
US inflation data is due on Wednesday, which will influence market direction.

Asian & European Open:

Asian stock markets declined overnight, as markets reacted to US jobs data, which dented hopes for Fed cuts this year.
The MSCI index for the Asia-Pacific region outside Japan declined -0.3%.
The CAC 40 future is down -1.4% and has led to a wider correction in European and US futures. The DAX lifted to 105.254.

Financial Markets Performance:

The USDIndex remained firm ahead of the Fed’s upcoming meeting. The USD’s strength was bolstered by a stronger-than-expected jobs report (272K), reducing the likelihood of imminent rate cuts by the Fed.
The EURUSD declined by 0.44% to $1.0740, falling over 2.5% against the USD this year, and reached its lowest since August 2022 against the GBP.
The USDJPY advanced to 157.17 – GDP contracted, wage growth has been slow, Import prices have risen due to a weaker yen, sluggish consumer spending has negatively affected the economy, private consumption makes up half of Japan’s economic activity.
USOIL sustained gains above to $75, supported by hopes of increasing fuel demand this summer. 
Gold dipped to $2,292.70, with key 2-month support at $2,275.

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Andria Pichidi

Market Analyst

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