French elections

Germany's blue-chip DAX stock index is currently facing mixed signals as investors await the outcome of Federal Reserve Chair Jerome Powell's testimony, which spans Tuesday-Wednesday.

The DAX, Germany's benchmark stock index, is currently experiencing a bullish sentiment after a period of uncertainty surrounding the French elections. With concerns regarding a potential far-right victory easing up due to the recent parliamentary decision, investor confidence has received a boost. This positive shift is reflected in the DAX's price.

Gold and silver have been on the rise in the last couple of days, recovering from weakness earlier in the week. Once again, gold has risen alongside equity markets, suggesting the recovery is not entirely driven by haven flows amid uncertainty surrounding the upcoming French snap elections, which appears to have only impacted the local stock and bond, as well as regional, markets.

It's possible we'll know who won the first round of France's election by the time markets open in Asia next week, which means the euro and European index futures could be more active than usual. Traders should then look to the pound and FTSE for pre-election jitters, although once again it could be Asian markets that get to witness the results. Despite the public holiday on Thursday, the US economic calendar is also packed. Two key ISM reports for manufacturing and services land before July 4th, alongside JOLTS and ADP employment reports, which are the warm-up acts for NFP on Friday.

The euro was under pressure in the first half of Wednesday’s session, ahead of the French snap election and due to growing signs of weakness in Germany’s economy. This political uncertainty has bolstered the US dollar, especially against currencies where the central bank is more dovish or where interest rates are significantly lower than the US – for example the Japanese yen.

The first round of the French Presidential elections will be held on Sunday 11th April. The market has woken up to the possibility of a Le Pen win.