French Election Sparks EUR Relief Rally, JPY Slump Continues

The euro experienced a "Macron bounce" in early Asia-Pac trade as initial results of the first round of France's presidential election showed that the incumbent's edge over his far-right rival Le Pen was slightly wider than expected. The exit polls forecast a tight runoff but all predicted Macron's victory in the second round. The initial rally in EUR faded amid the realisation that the next two weeks of intense campaigning may still turn the election tide. While the euro remained the best G10 performer, it gave away some of its initial gains.

• The pullback in EUR/USD was facilitated by an uptick in U.S. Tsy yields, which lent support to the broader USD. The DXY index advanced towards the psychologically significant 100 level after briefly showing above there just ahead of the final WMR fix of last week.
• Yen sales resumed and the currency landed at the bottom of the G10 basket, with the familiar theme of Fed/BoJ policy divergence still in play. Gains in USD/JPY were capped at the round figure of Y125.00 as the rate narrowed in on its recent multi-year high (Y125.09).
• Commodity-tied currencies came under pressure amid weaker crude oil and iron ore prices. The NZD was the worst performer in that space, with eyes on the RBNZ's upcoming monetary policy review.
• Spot USD/CNH crept above the CNH6.38 mark as the yield on China's 10-Year bond fell below that on the U.S. counterpart for the first time since 2010. There was continued sense of concern about China's Covid-19 outbreak, with above-forecast PPI print underscoring pressure on local manufacturers.
• UK activity indicators & Norwegian CPI headline the global data docket today, while comments are due from Fed's Bostic, Bowman, Waller & Evans.