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Euro Hits 3-Week High As French Election Looms
Topic Started: Apr 20 2017, 08:43 AM (37 Views)
Webster
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....as if the Euro didn't have enough to worry about, there's this business of France's Presidential Election for it to deal with....

(The Guardian) Political issues continue to occupy the market’s attention today.

The first round of the French presidential election is just three days away, so investors are watching closely to see which candidates make it through to the run-off two weeks later.

The race looks rather tight, raising concerns that the eurozone could be dragged into another crisis if the more mainstream candidates stumble.

Neil Wilson of ETX Capital explains: Volatility in the euro has peaked at its highest since before the June referendum as markets weigh the prospects of either Marine Le Pen or Jean-Luc Melenchon – or both - making the second round. The killer scenario for the euro would be if both candidates make the May 7th runoff as it would raise the very real possibility of France exiting the euro.

Current polling gives the nod to Macron and Le Pen, with Macron eventually winning. But with four candidates polling around 20% there is every reason for caution. We’re looking at contingency plans in the event of a Le Pen-Melenchon runoff as this would spark a big selloff in the euro and French government bonds, as well as bank stocks.
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Webster
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--Investors are still too complacent over the risks to the euro from France's four-horse election race, warn analysts (fastFT, 20 April 2017)
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Webster
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--France update 4: New @harrisint_fr poll shows…
Macron 25 percent
Le Pen 22
Fillon 19
Mélenchon 19 (Jim Roberts, 20 April 2017)
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Webster
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(The Guardian) Greece hopes to make bailout progress this week
--The Greek government is hoping to make progress in its negotiations at the IMF Spring meeting this week.

The country’s finance minister, national economy minister and deputy finance minister are all flying to Washington today for crucial debt talks, including with Fund chief Christine Lagarde.

(The Guardian's) Helena Smith reports from Athens: Greek officials say the all-important issue of debt – and ways to reduce it – will be at the core of talks the finance and national economy ministers, Euclid Tskalotos and Dimitris Papadimitriou, will have in Washington.

Tsakalotos, whose first meeting will be with IMF managing director Christine Lagarde on Friday, is hoping that the framework of a debt relief deal can be secured in time for the next Eurogroup meeting of single currency finance ministers on May 22.

Athens’ leftist-led government, in a sop to sceptical MPs unnerved by the prospect of further pension cuts and tax increases - concessions made to conclude the long-stalled compliance review at the heart of the country’s latest standoff with creditors - has threatened the measures won’t be implemented if a debt relief deal isn’t cut first even if the unpopular policies aren’t due to be enforced until 2019.

Auditors representing Greece’s bailout lenders are expected to return to Athens next week to complete the technical aspects of the review before a staff level agreement is finally wrapped up. Parliament would then legislate the measures before a comprehensive deal, including medium-term debt relief measures, are put before the Eurogroup of finance minister.

But as ever nothing is quite as easy as it seems. The IMF, which only this week said it could not participate in the latest bailout programme unless Greece’s debt burden became manageable, projected the country’s primary surplus would be just 2% in 2018, well short of its target of 3.5%. That once again leaves the door wide open for renewed friction between the Fund and euro area member states not least Germany which has made IMF participation a condition of further loan disbursements.

In forecasts issued late Wednesday, the IMF attributed Athens’ bigger- than-expected primary surplus of 3.3 percent in 2016 to “temporary factors.” Greece’s economic recovery is hanging by a thread with many fearing it could be thrown into reverse unless a deal is reached and the uncertainty is ended given the country’s tight €7.5bn debt repayment deadline early July.

But speaking to reporters today, Greece’s government spokesman said the country’s extraordinary over-performance “finally noted by the Fund” would determine the fiscal path it would take once its current 86 bn euro bailout programme ended in September 2018.

The government’s over-arching aim was for primary surpluses to be reduced, he said, so that the Greek economy could regain its potential and achieve the highest possible rates of growth.
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Webster
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(The Guardian) The Economist has just backed Emmanuel Macron for the French presidency.

It argues that the centrist candidate can break the mould of French politics and push through reforms to improve the French economy.

It’s not really a surprise. But here’s a flavour of the Economist’s argument: Mr Macron is untainted, if only because he is a political outsider. He has never held elected office, though he was the appointed economy minister in the present government. His plans are less bold than Mr Fillon’s, cutting only 120,000 public jobs and €60bn in spending, but an independent study rates them as equally free-market. Mr Macron is pro-business, but more subtle about it. Instead of abolishing the 35-hour week, he would help companies work around it. Rather than raise the retirement age, he would unify the country’s 35 pension schemes, eventually doing more to enhance labour mobility.

Mr Macron is more outward-looking, too. He backs recent EU free-trade deals that Mr Fillon rejects. He is more likely to be able to work with Germany to strengthen the governance of the euro. He is socially liberal, whereas his opponent, close to Roman Catholic traditionalists, opposed gay marriage and wants to limit gay adoption. Mr Fillon would impose immigration quotas and end sanctions against Russia; Mr Macron exhorts the French to live up to their values.

The worry is that Mr Macron will not get his reforms through the legislature. Though En Marche!, the party he founded, will run in every constituency in elections to the National Assembly in June, it will struggle to win a majority, unlike Mr Fillon’s Republicans. But do not write off his political skills. In rallies and on TV he has more than held his own. En Marche! is barely a year old, but it has 250,000 members—more than twice as many as the Socialists.

His critics say Mr Macron is wishy-washy. But he is the only candidate who has made a full-blooded case for the open society and economy this newspaper believes in. That takes courage—the courage to step outside France’s party system, to defend complex arguments against polarising sound bites and to stand for optimism in an age of identity politics. That is a message all democracies need to hear.

-Read more: http://www.economist.com/news/leaders/21721143-french-go-polls-they-are-angry-and-divided-consequential-choice-franceand
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Webster
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(The Guardian) A reminder, from Sky News, of how close the French election looks...
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