LONDON/SINGAPORE, June 10 - The euro fell sharply on Monday, hit by political uncertainty after gains by the far right in voting for the European Parliament on Sunday prompted a bruised French President Emmanuel Macron to call a snap national election.
"The election results over the weekend from the EU largely showed a pick up in support for the right wing parties, generally what was expected, but the surprise element is that Macron has reacted by calling a snap election, so that makes the market more nervous," said Lee Hardman, senior currency analyst at MUFG.
Markets are now pricing in 36 basis points of Fed rate cuts this year compared to nearly 50 bps - i.e. two 25 bp cuts - before the jobs data. The paring back of expectations for rate cuts has been supporting the dollar for much of 2024, with the Japanese yen suffering particularly. Reuters reported last week that BOJ policymakers are brainstorming ways to slow its bond buying and may offer fresh guidance.