Markets

Euro stalls after rally as Canadian dollar floored by US duties

Caution over risk of Marine Le Pen win in French poll may limit euro’s gains for now

Official posters for candidates for the 2017 French presidential election Marine Le Pen of the French National Front and Emmanuel Macron, head of the political movement En Marche. Photograph: Pascal Rossignol

Tue Apr 25 2017 - 06:53

The euro steadied on Tuesday, pausing after a rally sparked by the first-round results of the French presidential election, while the Canadian dollar fell after the US slapped duties on Canadian softwood lumber.

The euro last traded at $1.0866, off Monday’s peak of about $1.0940, its highest level since November 10th, after centrist Emmanuel Macron won the first round of the French presidential elections.

Polls show Mr Macron defeating anti-EU, anti-euro nationalist Marine Le Pen in a run-off vote due to take place next month.

The euro’s sharp bounce on Monday was partly due to the triggering of stop-loss buying at $1.09, said Tan Teck Leng, forex analyst for UBS Wealth Management in Singapore.

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After that rally, lingering caution over the risk of a surprise win by Ms Le Pen in the run-off vote will probably limit the euro’s gains for now, he said.

“Our view on the euro/dollar is that between now and May 7th, you’ll probably be trading between $1.08 and $1.10,” Mr Tan said.

Opinion polls indicate the business-friendly Mr Macron, who has never held elected office, will take at least 61 per cent of the vote against Ms Le Pen after two defeated rivals pledged to back him to thwart her Eurosceptic, anti-immigrant platform.

The Canadian dollar fell 0.4 per cent after US commerce secretary Wilbur Ross said his agency would impose new anti-subsidy duties averaging 20 per cent on Canadian softwood lumber imports. The loonie slipped to C$1.3560 per US dollar at one point, its lowest level since late December when it sank to C$1.3598.

Yen slips

The US dollar rose 0.3 per cent to 110.08 yen, as the safe haven yen edged lower.

There was little market reaction after media reports said North Korea put on a massive live-fire drill on Tuesday.

Market participants have been worried that North Korea could conduct its sixth nuclear test, or another long-range missile launch, to coincide with the 85th anniversary of the foundation of its army on Tuesday.

Analysts said there was some relief for now, over the lack of such action by North Korea.

They added, however, that concerns over geopolitical risks were likely to persist, limiting the yen’s declines and tempering the dollar’s gains against the Japanese currency.

“For the dollar to make a try for 112 yen, you’d like to see some type of positive news out of the United States and an easing in North Korea-related tensions,” said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.

One potential negative against the dollar is the risk of a US government shutdown, Mr Okagawa said.

US president Donald Trump indicated an openness on Monday to delaying his push to secure funds for his promised border wall with Mexico, potentially eliminating a sticking point as lawmakers worked to avoid a looming shutdown of the federal government.

Mr Trump is facing a Friday deadline for Congress to pass a spending Bill funding the government through to September or risk marking his 100th day in office on Saturday with a government shutdown. – (Reuters)

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