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FOREX-Euro holds firm after EU vote shows pro-Europe parties cling to majority

Published 27/05/2019, 03:50
FOREX-Euro holds firm after EU vote shows pro-Europe parties cling to majority
EUR/USD
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USD/JPY
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* Pro-EU parties fragmented, but cling to majority in
election
* Euro off 2-year low, sterling edge up
* Yen slips, Trump sees Japan trade deal after July
elections
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Hideyuki Sano
TOKYO, May 27 (Reuters) - The euro held firm in early Monday
trade after pro-European Union parties withstood more
fragmentation than before to hold on to two-thirds of seats in
the EU parliament elections, limiting gains in nationalist
opponents.
The common currency traded at $1.1211 EUR= in Asian trade,
near its highest levels in 1 1/2 weeks, and off a two-year low
of $1.11055 touched on Thursday.
While centre-right and centre-left blocs are losing their
shared majority, surges in the Greens and liberals meant parties
committed to strengthening the union held on to two-thirds of
seats, official projections showed. The results dented the hopes of anti-immigration,
anti-Brussels National Rally led by Marine Le Pen, Italian
Deputy Prime Minister Matteo Salvini and others who have been
opposing attempts to forge closer EU integration.
"It looks like pro-EU parties still have a majority. To be
sure, we see a rise of anti-EU parties in some countries but it
is not like they are winning an outright majority," said Minori
Uchida, chief currency analyst at MUFG Bank.
"I'd expect markets' focus to shift back to U.S.-China
relations," he said.
Trading was seen subdued on Monday due to market holidays in
London and New York, limiting moves in other currency pairs.
The U.S. currency traded at 109.45 yen JPY= , up 0.15%,
underpinned by Japanese players' bargain-hunting.
Buying interest from Japanese investors is strong when the
dollar dips near 109 yen, said Mitsuo Imaizumi, chief currency
strategist at Daiwa Securities.
"Data shows Japanese investors bought a large amount of
foreign bonds a few weeks ago when the dollar fell near 109 yen.
There's demand from Japanese companies that need dollar for
their M&A deals," he said.
Still, the U.S. currency is not far from a three-month low
of 109.02 touched two weeks ago, hit amid worries about
escalating tensions between Washington and Beijing over trade
and technology.
The dollar has been also capped against the yen as U.S.
President Donald Trump is seen putting pressure on Japan to take
measures to reduce its trade surplus with the United States.
Trump, who arrived in Tokyo on Saturday, tweeted on Sunday
that much of the trade negotiation with Japan will wait until
after the country's election in July. The British pound ticked up 0.15% to $1.2731 GBP=D4 ,
having regained some ground after Prime Minister Theresa May set
out a departure date, bouncing back from a 4-1/2-month low of
$1.2605 set on Thursday.
But the prospect of a "no deal" Brexit was fast becoming the
central battle of the race among contenders to succeed May, with
four of eight leadership hopefuls having said Britain must leave
the EU on Oct. 31 even if this means a no-deal Brexit.
(Editing by Shri Navaratnam)

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