Showdown between Macron and Le Pen on May 7 will determine direction of USD/EUR

SINGAPORE (April 25): Now that it’s down to centre-left former socialist candidate Emmanuel Macron and far-right leader Marine Le Pen in the race for French presidency, Deutsche Bank Wealth Management is projecting a rise in core government bond yields – as well as maintaining expectations of the USD strengthening against the euro over the next 12 months.  

In an insights note issued on Tuesday, Deutsch global CIO Christian Nolting describes the second and final round of the presidential election on May 7 a “proxy vote for or against the European Union and the euro” – rather than it being a contest between left and right political views.

“Macron is France's most fervent pro-euro and pro-European Union politician, advocating ever closer integration and taking a negative view on Brexit. Le Pen, on the other hand, has campaigned on a strong anti-Europe ticket, calling for a rejection of the Schengen agreement on open borders, for a reintroduction of the French franc and for a referendum on EU membership. In other words, she sees Brexit as an example to follow,” Nolting explains.

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