• Busting Uber myths

    The ehailing firm is constantly trying, succeeding - and sometimes failing, says Ian Mann.

  • Trapped in a democracy

    The very people elected to bring benefits to all are undermining SA, says Solly Moeng.

  • Marikana spectre

    Five years after the bloody massacre calls for justice are growing louder, says Terry Bell.


Euro hits three-week high before France vote

Apr 20 2017 12:33
Bloomberg: Vassilis Karamanis

London - The euro rose to its strongest level versus the dollar since March 29 as investors reduced short positions in the spot market before the first round of the French presidential elections.

Investors have cut back on hedging positions throughout the week, with euro-Swiss franc hitting a two-week high Thursday. Demand for fresh long exposure versus the dollar was also seen as euro bulls took comfort from $1.0700 support holding up, according to foreign-exchange traders in Europe and the Middle East. 

Downside exposure in the common currency is mainly expressed through vanilla puts and one-touch structures, albeit some unwinding also took place lately in the options market, said the traders, who asked not to be identified as they weren’t authorized to speak publicly.

While option pricing reveals the market is acknowledging the tail risks surrounding the French vote as a whole given a tight battle makes polling difficult, the risks seem to concentrate more on the first round of the elections.

The premium for euro puts versus the dollar on the one-week tenor surpassed that of the one-month tenor for the first time on Thursday. Front-end risk reversals, a gauge of market sentiment and positioning, hit their lowest level since the UK referendum to exit the European Union.

Underpricing or not the effect of the French elections, the market largely remains in a wait-and-see stance before the weekend. The realized volatility in euro-dollar on the one-month tenor has dropped since December, touching its lowest level since September 2014.

Read Fin24's top stories trending on Twitter:

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

markets  |  euro  |  currencies



Company Snapshot

We're Talking About...

Savings Month

It's never too late to start saving. Visit our special issue and add your voice.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

The proposal to nationalise SARB will

Previous results · Suggest a vote