French Elections Update: Macron Strikes Victory in Vicious Debate With Le Pen

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Ahead of the final round of voting in the French presidential election, to be held on Sunday, May 7th, the two remaining candidates, Marine Le Pen and Emmanuel Macron, met for a final televised debate.  Around 20 million viewers, out of an electorate of nearly 47 million, were expected to watch the two and a half hour debate.

Polls Had Macron Ahead

Ahead of the debate, the latest opinion polls had Macron in front with a comfortable lead of 20% over his far-right counterpart. Le Pen’s desperate need to gain support was clear as the two clashed in bitter exchanges with Le Pen attacking Macron over his past as an investment banker and former economy minister calling him the “candidate for globalization gone wild”.

In return, Macron attacked Le Pen’s promise to exit the euro which he called a fatal plan that would surely cause a currency war though Le Pen labelled Macron’s remarks part of his “project fear”. The vicious nature of the debate was highlighted by the personal insults exchanged by the two with Le Pen labelling Macron a “smirking banker” and Macron calling Le Pen a “parasite”.

Le Pen & Macron Clash Over Terrorism

The most heated part of the debate came as the pair clashed over terrorism. Le Pen accused Macron of weakness saying “you have no plan, but you are indulgent with Islamic fundamentalism”. However, Macron returned fire saying” I will lead a fight against Islamic terrorism at every level. But what they are wanting, they trap they are holding out for us, is the one that you offer – civil war”.

Much of Le Pen’s support has been gained on the basis of her hardline approach to terrorism and immigration. More than 200 people have been killed by Islamic militants in France since 2015, and a growing portion of the population have got behind Le Pen as a result. Indeed, Le Pen’s presence in the debate marked the first time that a National Front candidate has appeared in a run-off debate which highlights the level of support Le Pen has gained over her campaign.

Snap Poll Shows Macron Won Debate

Following the debate, it seems that Macron has maintained his comfortable lead over Le Pen with 63% of viewers saying they felt Macron had won, in a snap poll conducted by Elabe for BFMTV. Macron finished only 3% ahead of Le Pen in the first round of votes, but after receiving endorsements from Fillon and Hamon, it is expected that he will gain a large portion of the socialist vote.  However, there are still some risks as a large percentage of voters remain undecided, and the potential for a last-minute swing towards Le Pen still lurks.

Greatest Volatility to Be Seen on Le Pen Victory

Polls have consistently pegged Macron to beat Le Pen by around 60% to 40% of the vote, and so Macron’s victory should be mostly priced in meaning that in the event of his victory, EUR is likely to see a relief rally, but this should ultimately be quite muted. The much greater move would come on a surprise victory for Le Pen as this result is not priced in. Indeed, following Macron’s victory in the first round, Markets have priced down the odds of a Le Pen victory creating scope for even greater volatility in the event of an unexpected win for the far-right candidate.

Technical Perspective

Price action in EURUSD has stagnated over the last two weeks as markets await the final voting results. The March high of 1.0909 has been a key battleground with price oscillating tightly around this level. The medium-term bearish trend line resistance is now sitting just above price, and the market looks poised to break higher on a Macron victory though the extent of this rally is not yet clear. A break higher and retest of the 1.0909 level should see the level hold as support, encouraging further buying to take price higher. Deeper support lies below market at the rising short-term channel bottom.

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