Foreign Exchange Report - 25.04.2022

The dollar rose on Monday, gaining on the Euro despite Macron’s win in the presidential elections in France. The Dollar index increased 0.2% to 101.3, testing the two-year high of 101.33 from last week. "With the French election out of the way the market is starting to focus on other worries. Stock markets are in the red this morning, and that risk aversion has generally benefitted the Dollar, and this is why the Euro has been dragged a bit lower," stated Sim Moh Siong, Bank of Singapore currency strategist. "There are three big forces driving the markets and all our worries," he added. The Euro declined 0.29% to $1.0778, following a higher open, not far from last week’s two-year low of $1.0758. Yet it gained 0.12% against the Pound, hitting a one-month top of 84.32 pence in early trade. French President Emmanuel Macron won 58.54% of the votes in Sunday’s election, compared with Marine Le Pen's 41.46%. Markets had feared a win for Le Pen would have resulted in considerable economic change within the French economy, Reuters reports. "Macron's clear victory is likely to reassure the markets that the European dynamic will continue," said Frederic Leroux, from the Carmignac investment team.

Elsewhere, Sterling edged down 0.3% against the dollar to a low not seen since September 2020 of $1.28085. The Pound has been impacted by retail sales and consumer confidence data published last week, as well as indications of a slowdown in rate hikes by the Bank of England.

In China, the Yuan declined to a one-year low on Monday, prolonging losses after its worst week since 2015, fuelled by strict Covid measures and lockdowns throughout the country. Before the market opened on Monday, the People's Bank of China (PBOC) set the midpoint rate at 6.4909 per Dollar, the lowest since August last year. "The (Chinese) currency started to weaken last week on the back of lockdowns and the restrained approach to interest rate cuts," added the Bank of Singapore currency strategist. In addition, the Hong Kong Dollar fell to as low as HK$7.8475 per Dollar, close to the HK$7.85 point when the Hong Kong Monetary Authority will intervene.

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