Euro Rises after France's First-round Vote; Yen Fragile

The euro rose after the first round of France's snap election put the far-right in pole position. Reuters
The euro rose after the first round of France's snap election put the far-right in pole position. Reuters
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Euro Rises after France's First-round Vote; Yen Fragile

The euro rose after the first round of France's snap election put the far-right in pole position. Reuters
The euro rose after the first round of France's snap election put the far-right in pole position. Reuters

The euro rose on Monday after the first round of France's snap election put the far-right in pole position, though by a smaller margin than projected, while the yen struggled to break away from a near 38-year low.
Marine Le Pen's far-right National Rally (RN) party won the first round of France's parliamentary elections on Sunday, exit polls showed, although analysts noted the party won a smaller share of the vote than some polls had initially projected.
The euro, which has fallen some 0.8% since President Emmanuel Macron called the election on June 9, was last 0.4% higher at $1.0756, after having touched two-week top earlier in the session.
"They (RN) have actually performed a little bit worse than what was expected," said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
"As a result of that, we saw the euro rise modestly in early Asian trade just because we might actually get less fears of more expansionary and unsustainable fiscal policy if the far-right party did a little bit worse."
The rise in the euro sent the dollar a touch lower against a basket of currencies, though the greenback was also reeling from data on Friday that showed US inflation cooled in May, cementing expectations the Federal Reserve will begin cutting interest rates later this year.
Market pricing now points to about a 63% chance of a Fed cut in September, as compared to a 55% chance a month ago, according to the CME FedWatch tool.
Against the dollar, sterling rose 0.11% to $1.2659, while the Aussie dipped 0.07% to $0.66655.
The New Zealand dollar edged 0.12% higher to $0.6098. The dollar index was last 0.11% lower at 105.61, having earlier hit a one-week trough.
"Should inflation continue to behave itself, and incoming data fall in line with the FOMC's forecasts, through the summer, the first 25bp cut remains on the cards as soon as September," said Michael Brown, senior research strategist at Pepperstone.

The yen struggled to gain ground against a broadly weaker dollar and was last 0.1% lower at 161.03 per dollar, standing just a whisker away from a 37-1/2-year low of 161.27 hit on Friday.
The Japanese currency had reversed early gains in the session following revised data that showed its economy shrank more than initially reported in the first quarter.
Separate data on Monday also showed the business mood in Japan's service-sector soured in June as the lower yen pushed costs higher, offsetting a big lift in factory confidence and pointing to consumption weakness.
The yen has already fallen more than 12% this year as it continues to be weighed down by stark interest rate differentials between the US and Japan, with its latest decline to the weaker side of 160 per dollar keeping investors on heightened alert for any intervention from Japanese authorities to prop up the currency.
Elsewhere in Asia, the Chinese yuan - also a victim of stark interest rate differentials with the US - fell a marginal 0.04% to 7.3204 per dollar in the offshore market.
The onshore yuan last stood at 7.2679 per dollar.
The Chinese currency drew some support from a private sector survey which showed factory activity among smaller Chinese manufacturers
grew at the fastest pace since 2021 thanks to overseas orders.
That came after official data over the weekend revealed China's manufacturing activity fell for a second month in June while services activity slipped to a five-month low.
"The PMIs for June were mixed but on balance suggest that the recovery lost some momentum last month," said economists at Capital Economics.
"We think economic activity will continue to hold up relatively well in the coming months. While the latest property stimulus has done little to boost new home sales, fiscal stimulus and strong exports should continue to support growth, at least in the near term."



Kuwait Finance Minister Forecasts $85 Bn Deficit Over Next Four Years

Kuwait’s Finance and Investment Minister Dr. Anwar Al-Mudhaf (Asharq Al-Awsat)
Kuwait’s Finance and Investment Minister Dr. Anwar Al-Mudhaf (Asharq Al-Awsat)
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Kuwait Finance Minister Forecasts $85 Bn Deficit Over Next Four Years

Kuwait’s Finance and Investment Minister Dr. Anwar Al-Mudhaf (Asharq Al-Awsat)
Kuwait’s Finance and Investment Minister Dr. Anwar Al-Mudhaf (Asharq Al-Awsat)

Kuwait’s Finance and Investment Minister, Dr. Anwar Al-Mudhaf, anticipates a budget deficit of 26 billion dinars ($85 billion) over the next four years. Speaking to Kuwait TV, he revealed that in the past decade alone, Kuwait accumulated a deficit of 33 billion dinars ($107.7 billion), financed from state reserves.

Looking ahead to the 2024-2025 fiscal year, Kuwait expects revenues of 18.9 billion dinars ($61.7 billion) against expenditures of 24.5 billion dinars ($80 billion), resulting in a projected deficit of 5.6 billion dinars ($18.2 billion).

Al-Mudhaf emphasized the need for economic reforms, focusing on fiscal sustainability and diversifying non-oil revenues to strengthen Kuwait’s economy.

He outlined nine initiatives aimed at restructuring the budget and increasing non-oil income, stressing that these reforms are essential and supported by the country's leadership.

Regarding social support, Al-Mudhaf assured that citizens’ salaries will be unaffected, with subsidies directed more equitably to those in genuine need. He highlighted the importance of fair distribution of support, addressing disparities between individual and corporate beneficiaries.

Al-Mudhaf reaffirmed Kuwait’s commitment to economic reform through initiatives aimed at enhancing trade, tourism, and financial sectors while preserving reserves for future generations.

Moreover, the minister emphasized that the country’s ruler has directed clear efforts to boost new investment opportunities, refuting claims of impending salary or bonus cuts as untrue. He urged people not to trust social media rumors about the Ministry of Finance or any other ministry.

Regarding foreign investments, the Al-Mudhaf said: “We have multiple agreements with Chinese firms and are working on developing free trade zones.”

“The Chinese government has assigned a company to handle and represent its interests in Kuwait, particularly at Mubarak Port. Additionally, there are agreements concerning the Shaqaya project, housing developments, and the northern region,” he clarified.

Al-Mudhaf also stressed the importance of supporting the private sector, expanding trade, and diversifying financial tools.