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Euro hits six-month high on Macron victory

  • Euro jumps to $1.10 against the dollar as Macron secures a victory.
  • Macron gains 65 percent of vote to Le Pen's 35 percent, according to early exit polls.
  • Future of Europe's currency union stabilized under Macron Presidency.

The euro reached a six-month high against the dollar when markets opened Sunday evening as exit polls showed a victory for centrist candidate Emmanuel Macron in the final round runoff of the French presidential race.

The European single currency climbed to $1.1010 in early deals after closing at $1.0995, according to Reuters data. The move marks a 0.13 percent rise on the session. This is the first time the euro has reached such highs since the U.S. presidential election.

Macron emerged the winner in the race to the Elysee Palace late Sunday as polls closed on one of the closest fought presidential races in recent French history.

The centrist candidate is seen to have secured approximately 65 percent of votes to far-right Marine Le Pen's 35 percent, according to a Kantar Sofres poll. The success of Macron, a 39-year-old former Rothschild banker, buoyed markets in early Asian trading as fears over a break-up of the currency union subsided under Marine Le Pen's defeat.

The National Front's Le Pen had campaigned for a withdrawal from the currency union, saying she would replace it with the franc as France's national currency. She also suggested a second, looser type of currency cooperation, much like the ECU (European Currency Unit) basket of currencies that preceded the euro.

Macron, however, a staunch europhile, has reiterated his commitment to strengthening the EU and the euro.

The move, while positive, was only slight, indicating that a win for Macron was largely priced in by markets based on polling indicators.

The euro also climbed slightly against sterling to £0.8485, according to Reuters.

Simon Derrick, chief currency strategist at BNY Mellon, told CNBC shortly after the result that the gains for the euro were likely to be "modest at best", given the anticipated outcome.

Commentators had previously predicted that the euro could rise as high as 5 percent against the dollar in the days preceding the vote. Meanwhile, a win for Le Pen was expected to hurt the euro by as much as six percent, according to Deutsche Bank estimates.

Derrick said that markets would now likely be looking ahead to the next major political events across Europe.

"Could we see (the euro) a little higher on a relief rally? Yes. But I think that already people are going to be thinking about quite how much support Ms Le Pen has got – is it 40 percent or plus? – and what does that mean for the Italian election. So, actually right now we're looking ahead and from that perspective I think the euro may be not as much as you might think," Derrick noted.

The currency union has faced mixed fortunes over the course of the presidential race - one that has been mired by personal barbs, fraud allegations and security threats.

In the wake of the first round of voting on April 23, the euro reached a five-and-a-half month high against the dollar after Macron was placed in the lead with 23.7 percent of votes to Le Pen's 21.7 percent. It traded at $1.09395.

Last week, markets again rallied after Macron was deemed the frontrunner in a televised debate - the last of the campaign period.

Macron has pledged a series of economic reforms which he says will help stem France's stubbornly high unemployment rate, which have hovered around 10 percent over recent years.

It is also hoped that Macron could open the way to significant EU reforms, as the Union faces continued dissent from within its member states.

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