Market Insights Podcast – France and UK elections, US ISM Services PMI, NFP are key highlights for this week

OANDA Senior Market Analyst Kelvin Wong joins Jonny Hart to discuss this week’s key economic data and events. We kicked off the week with the post market reactions to the outcome of the pivotal first round of the France legislative elections that saw Le Pen’s far right National Rally party took the lead while French President Macron’s centrist alliance dropped to third place, below a far left coalition, New Popular Front party.

Political uncertainty in EU remains as horse trading begins between Macron’s centrist party and the far left to prevent Le Pan’s far right party from gaining a majority foothold in the French parliament in this Sunday, 7 July second round of voting. Interestingly, the Euro, CAC 40 and DAX pared back intraday gains and traded closer to the respective session lows yesterday, 1 July.

Next up, UK will vote on this Thursday, 4 July; markets have already priced in a Labour landslide victory over the incumbent Conservatives, the first in 14 years. The GBP accordingly to media polls is expecting to gain in the medium-term  due to Labour advocating warmer ties with EU, and maintain discipline on fiscal spending, preventing another sudden spiked up in the 10-year UK gilt yield that occurred in autumn 2022. So far, the EUR/GBP remains below a key resistance at 0.8620 after it traded to a 22-month in mid June.

Lastly, US ISM Services PMI with its prices paid sub-component out on Wednesday, 3 July together with US non-farm pay rolls data for June due on Friday, 5 July offer more clarity on the path of the upcoming expected first Fed funds rate cut in September.

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