North American FX Open - Euro relief rally after first round of French voting

Eur/Usd was the subject of a sizeable relief bid overnight, with the pair making it as far as 1.0776, after the first round of voting in the French elections showed that Marine Le Pen's far right National Rally party will win by a smaller margin than some polls had projected and that a hung parliament is the most likely outcome, with Le Pen unlikely now to be able to garner an outright majority. The French CAC 40 index rose by 2.8% at one stage on the political relief, but there is still the second round of voting to come next weekend.

Overnight the Japanese Tankan report showed an increase in the large manufacturing index to 13, above the consensus for a repeat of the 11 figure from Q1.

The Eurozone final June manufacturing PMI improved to 45.8 from its 45.6 flash reading. but was still some way off the 47.3 print in May.

The UK reading was revised down quite significantly from its 51.4 flash print to 50.9. Meanwhile in the UK, mortgage approvals for May fell to 60k, their lowest level since Jan, but the Nationwide house price index rose by an above 0.2% in June and 1.5% y/y.

After Thursday's disastrous debate performance by President Biden lead to heightened expectations that he might stand down and allow the Democrats to select another candidate for the November election, over the weekend the Biden camp have closed ranks and sought to blame his poor showing on exhaustion and bad preparation.

Politics looks set to remain in the forefront of traders minds, with the UK elections on Thursday likely to herald the end of the Conservative Party's 14 years in power and the second round of French elections set to take place next weekend.

Today's focus should fall on German CPI and the US manufacturing ISM.

The readings from the German states has been mixed, so the pan-German numbers will be analyzed ahead of tomorrow's EZ flash CPI estimate.

Growth has been a greater focus in the US, so we expect a lot of scrutiny this week on the ISM reports, with manufacturing due today and services on Wednesday. As usual when they are released before this Friday's, look out for the moves in the employment components of both sectors.

The ECB host their annual forum on central banking in Sintra from Monday to Wednesday, so expect a lot of ECB speakers, but we should also hear from the Fed Chair Powell on Tuesday afternoon at a panel event at the forum.

Today we should hear from the ECB's Nagel and Lagarde.

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