The euro rose on Monday as markets focused on the European Central Bank’s tools to combat currency bloc fragmentation, even after President Emmanuel Macron’s centrists lost an outright majority in the French parliamentary elections.
* Macron’s Ensemble alliance won the largest number of seats in the National Assembly, but fell far short of the absolute majority needed to control parliament, according to final results.
* Analysts and traders paid no attention to the election result, focusing instead on the European Central Bank’s attempts to contain borrowing costs in the bloc’s south and the outlook for global monetary policy.
* “Although a Macron presidency and a majority in Parliament would be very positive for the cooperation of the euro zone and others, it is rather long-term, it is not something that affects the markets here and now,” said Ingvild Borgen Gjerde , currency analyst at DNB Markets.
* “There are two things that are very important for the euro: What kind of anti-fragmentation tool does the ECB come up with and the outlook for monetary policy.”
* Last week, the European Central Bank promised to devise a new anti-fragmentation tool that should provide fresh support to the bloc’s indebted south as the ECB raises interest rates for the first time since 2011.
* The euro was up 0.3% against the greenback at $1.0522.
* The dollar was little changed against the Japanese currency at 134.92 yen, after hitting 135.44 yen in the Asian session, near Wednesday’s high of 135.60, its highest level since October 1998.
* The dollar index, which measures the greenback’s performance against a basket of six currencies including the euro and the yen, fell 0.3% to 104.41 but remained near a two-decade high of 105. 79 reached on Wednesday, when the Federal Reserve raised interest rates by 75 basis points in an attempt to rein in high inflation.
* Fed Chairman Jerome Powell will testify before the Senate and House of Representatives on Wednesday and Thursday of this week.