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Dollar, Euro Up due to Rising U.S. Yields, Macron Re-election -Breaking


© Reuters.

By Gina Lee – The dollar was up on Monday morning in Asia, with the euro gaining a fraction after on Sunday.

By 12:31 PM ET (04:31 GMT), the index that measures the greenback’s value against other currencies increased 0.05% to 101.260

This pair fell 0.15%, to 128.37.

With the Australian dollar falling 0.82% against the U.S. in one month, it was also at its lowest point. Both Antipodean markets were closed on holidays, so the pair dropped 0.68% to 0.66600.

Both rose 0.6% to 6.5447, while the pair dropped 0.28% at 1.2801.

Macron’s defeat of rival Marine Le Pen was an outcome widely expected by markets and political analysts. According to interior ministry statistics, Macron received a solid 57.4% vote with 97% of votes already counted.

Macron acknowledged that not everyone voted for Macron to protect Le Pen, but vowed that he would address concerns of French citizens about their declining living standards in his victory speech.

The clear win of Macron is sure to give confidence to the markets about the strength and stability of the European economic system. “In the short-term, the biggest logical beneficiary from this election could possibly be the euro,” Frederic Leroux of Carmignac Investment Team told Reuters.

“The negative aspect for the markets of this rather comfortable election could however come from a quick decision in favor of a Russian oil embargo, which would exacerbate inflationary pressures and economic slowdown in Europe,” Leroux added.

Opened higher at $1.0840, euro traded last Friday at $1.0807; up 0.12% since Friday’s closing, but close to the two-year low reached during the week before. In early Asian trading, the currency gained 0.14% to 84.22 pennies against the pound.

The euro has been harmed by a stronger U.S. Dollar, which was fueled in part by higher Treasury yields. The markets are now ready for aggressive U.S. Federal Reserve interest rate increases. On Friday, the dollar index was barely shy of its two-year high of 101.33.

After falling 1.4% Friday, the pound was slightly softer against the dollar. This is its lowest level since November 2020. A combination of weak sales data and low consumer confidence, along with comments by the Bank of England earlier in the week suggested a slowdown in U.K.’s expected interest rate rise.

As the U.S. has been increasing interest rates, the Japanese yen is also the worst affected. The central bank works to keep its benchmark yields down. On Monday, the dollar was slightly firmer against the Japanese yen and had gained 11% in 2022. Last week, the USD/JPY pair reached the 129.4 mark. This was its highest level in over 20 years.