Post-Election EUR Rally Moderates, Commodity FX Come Under Pressure

The euro started the week on a firmer footing as exit polls indicated that French President Emmanuel Macron led his far-right rival Marine Le Pen by a wider-than-expected margin, with the two set to advance to the runoff. The polls suggested that Macron has an edge over Le Pen, with two more weeks of intense political campaigning ahead. The realisation that Macron and Le Pen are still locked in a tight race (even as the former remains the front-runner) coupled with a broader cautious feel may have underpinned the moderation of initial EUR strength, with EUR/USD closing its opening gap as a result.

• Commodity-tied currencies underperform in early trade amid weakness in crude oil, which comes under pressure from China's worsening Covid-19 outbreak.
• Demand for USD/JPY returned as U.S. Tsy yields have kept pushing higher, with participants seemingly confident that the BoJ would enforce its cap on 10-Year JGB yield if needed.
• China's inflation report headlines the Asia-Pac data docket, with UK activity indicators & Norwegian CPI due later in the day. Comments are due from BoJ's Kuroda as well as Fed's Bostic, Bowman, Waller & Evans.