ForexLive Asia-Pacific FX news wrap: EUR lower on EU politics

• ICYMI: JP Morgan shifted their forecast for the first FOMC rate cut from July to November
• Goldman Sachs preview the Federal Open Market Committee (FOMC) this week – no cut, but …
• Volvo shifting production of Chinese-made electric vehicles to Europe, to avoid tariffs
• It’s a big week coming up for oil, we hear again from OPEC plus from the IEA
• Japan economic ‘roadmap’ leak getting another outing after disastrous economic slump data
• Goldman Sachs oil forecast – see USD90/bbl Brent ceiling base case, risk to downside
• JP Morgan expect a dovish Federal Reserve Chair Powell after Wednesday’s FOMC statement
• PIMCO forecast another two European Central Bank rate cuts this year, September & December
• “Gold standard” plan by major world economies to halt new private sector coal financing
• Japan’s Q1 GDP (revised) -1.8% (annualized) – massive economic slump
• Major highway route into Federal Reserve’s seminar location at Jackson Hole has collapsed
• Trump probation interview set for Monday
• Nikkei: Bank of Japan will ‘consider’ whether to scale back its monthly JGB purchases
• Heads up for Asian markets holiday today – Hong Kong, Australia and China are out
• G7 to warn smaller Chinese banks to stop assisting Russia in evading Western sanctions
• Projections have centrist parties retaining majority in the European Union parliament
• EURUSD technical analysis and what I am watching next
• New Zealand and the robots have taken EUR/USD under 1.0780. Snap election called in France
• Trade ideas thread – Monday, 10 June, insightful charts, technical analysis, ideas
• EU politics – French President Macron has called a snap election. EUR/USD a touch lower.
• Monday morning open levels – indicative forex prices – 10 June 2024
• Weekly Market Outlook (10-14 June)
• ECB’s Holzmann says further rate cuts by the Bank could slam EUR and spike inflation
• GOLD ICYMI: People’s Bank of China completely stopped buying last month
• Forexlive Americas FX news wrap 7 Jun”: US adds 272K new jobs but unemployment rate rises

The
euro took a small hit in the very early hours of Asia trade with news
crossing of far-right parties in France and Germany polling very
strongly in European Union elections on Sunday. French President
Emmanuel Macron called a snap election in response to Marine Le Pen’s
far-right National Rally gaining seats in the EU parliament. Macron
dissolved the national assembly and called legislative elections on
June 30 and July 7.

I’ll
refer you to this summary from Politico of the election outcome and
what’s ahead for the French election, if you’d like more detail:

• Macron bets the house in election to break far-right momentum in France

As
for the EUR, concern over increasing uncertainty in EU politics,
economics, and markets triggered the run a little lower. Something to
bear in mind is that while the far right did well in France and
Germany across other parts of Europe they did not:

• Projections have centrist parties retaining majority in the European Union parliament

Back
to the EUR, it gapped a little lower and ticked back nowhere near
covering that gap. Having said that it has not extended lower. As I
post its close to session lows circa 1.0765 and looking precarious.

We
had the final reading for Japanese Q1 GDP today, it came in at an
appalling negative 1.8% annualised on the quarter. Yes, slightly less
appalling that the -2% annualized in the preliminary reading, but
this is a huge contraction. The slight improvement was due to a
revision for the business capital expenditure component of GDP, which
came in at -0.4% q/q in Q1 from the -0.8% decline in the preliminary
estimate. Private consumption fell 0.7%. Private consumption accounts
for more than half of the Japanese economy, this drop is troubling
indeed for Japanese authorities. The Bank of Japan meet this week
(statement due Friday) with some chatter of a further tightening via
a trimming of Japanese Government Bond purchases (see bullets above).
Seems ludicrous in the face of such dreadful data, but there you go.

USD/JPY
popped back above 157.00.

There
isn’t much to report across major FX. There were minor wiggles.
Hong Kong, Australia and China were all out on a holiday today.

This article was written by Eamonn Sheridan at www.forexlive.com.