Long EUR/USD after Macron Parliamentary first round win 11-12 june
Mon 6/12/2017 11:14 AM
Real Time AmpGFX – closed long EUR/USD, comment
Sold half unit EUR/USD at 1.1200
EUR has traded poorly in the wake of the French/Italian election developments; I was looking for a more immediate positive reaction.
EUR is trading in a more correlated fashion with equities and investor risk appetite than is normal for a low yielding current account surplus currency. In a low yield environment globally, investors are more focused on equity investments and less concerned with interest rate spreads or hedging costs. EUR has probably benefitted from unhedged equity inflow and is vulnerable to a correction in equities. The market is also net long EUR and in a risk-off environment, position squaring and deleveraging is likely to see EUR selling.
Considering the correction in tech stocks spreading to broader equity market weakness, EUR may be vulnerable to a deeper correction.
Sun 6/11/2017 7:35 PM MDT
Real Time AmpGFX – bought EUR/USD
bought half unit EUR/USD at 1.1207; s/l 1.1093
Comment
Exit polling predicts that Macron has won a landslide victory in the first round of the French parliamentary elections. Predictions are that this will translate into a clear majority in the final round next Sunday. This would provide an unusual degree of power and potential for reform in France.
Italy’s Five Star Movement has performed poorly in municipal elections
The political backdrop appears to be increasingly supportive for EUR.
Positions
Short half unit AUD/USD at 0.7547; s/l 0.7623; t/p 0.7388
Long half unit EUR/USD at 1.1207; s/l 1.1093