Yesterday, the far-right movement that’s been steadily gaining support in Europe and North America suffered a major setback in France after pro-EU centrist Emmanuel Macron soundly defeated his rival, Marine Le Pen. Le Pen represents a far-right movement in France that wants to leave the EU, move away from the single-currency bloc and prevent further immigration into France. It’s a movement similar to the Brexit that occurred last year, yet with a vastly different outcome.
In response to the election, the single currency touched $1.1023, the highest level since November. It also hit a one-year high of 124.59 yen, up .54 yen from Friday. Nonetheless, these gains were modest when compared to the reaction to Macron’s first-round victory last month. Yesterday’s vote effectively eliminates any risk of France leaving the single currency bloc. This brief rally for the euro was exaggerating by low trading in early Asian dealing.
The diminishing uncertainty surrounding the eurozone is going to be a key theme in both finance and politics, and will most likely be fairly supporting of risk sentiment. Nonetheless, there remain concerns whether the independent Macron can push economic reforms through the National Assembly without any deputies, which raises questions about the longevity of a Euro rally. A relative unknown three years ago, Macron won 66.06 percent of the vote in his first ever election, nearly double that of his rival (33.94 percent). He is now poised to become one of Europe’s most powerful leaders, yet it remains to be seen if he can secure a parliamentary majority.
The problem with Macron being in the center is that both the left and the right has issue with him. Macron’s economic agenda is mostly centered around weakening labor regulations in an effort to fight unemployment, which will most likely face stiff resistance from both trade unions and the political left of France. On the other side of the political spectrum, terrorist attacks in France have left many terrified of radical Islam, which serves as a strong fuel for the radical right. Interestingly enough as well, the right-leaning movement spearheaded by Le Pen is largely a youth movement; her support is mostly made up of younger voters, and Macron’s support base isn’t getting any younger, which could set the stage for a future victory.