Jordan Hiscott, Chief Trader at ayondo markets, says that a Brexit and Trump-inspired victory for Le Pen, or Melenchon, would see Euro hit parity with USD:
“With Brexit and Donald Trump’s victory fresh in everyone’s minds, forthcoming European elections come at what some might describe as an inconvenient time. Spurred on by Brexit, the EU certainly seems to be drifting away from centre-ground politics, previously dominated by inclusive European bureaucrats, towards more insular, nationalistic politicians, interestingly coming from both the left and right.
“This is perfectly illustrated by the upcoming French Election, with the two popular frontrunners coming in the shape of Marine Le Pen on the right and Jean-Luc Melenchon on the left. While at opposite ends of the spectrum politically, both are unhappy with the current terms of being in the Euro, with Le Pen after an outright referendum and Melenchon pushing for re-negotiation of the current terms, or an exit if this can’t be achieved. What can we determine from this? Two French politicians at opposite ends of the political spectrum, almost united in their mutual dislike, in its current form, of an institution they were the key founders of and have been the biggest supporters of for the past 30 years.
“If we extrapolate this to Europe’s financial assets, looking at EURUSD in particular, the prognosis is not good. The dual effect of two anti-EU politicians could weigh heavily and while currently trading around 1.0625, it wouldn’t surprise me to see parity with the US dollar following a Le Pen or Melenchon victory. Amazingly enough, this wouldn’t be a level seen since the October 31 2002, and a lifetime away from the all-time high of 1.60 in 2008. Whatever the result from the French elections, its arguable, the fragmentation of Europe is in swing.”