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For the 24 hours to 23:00 GMT, the USD declined 0.68% against the CAD and closed at 1.3658 on Friday.

The Canadian Dollar gained ground, after data revealed that Canada's unemployment rate surprisingly fell to 6.5% in April, charting its lowest level in nine-years. In the previous month, the unemployment rate recorded a reading of 6.7%, while markets were anticipating for a steady reading. However, the nation's net number of people employed increased less-than-anticipated by 3.2K in April, compared to a gain of 19.4K in the previous month.

In other economic news, the nation's seasonally adjusted Ivey-PMI advanced to a level of 62.4 in April, compared to a level of 61.1 in the prior month.

In the Asian session, at GMT0300, the pair is trading at 1.3648, with the USD trading 0.07% lower against the CAD from Friday's close.

The pair is expected to find support at 1.3594, and a fall through could take it to the next support level of 1.3541. The pair is expected to find its first resistance at 1.3747, and a rise through could take it to the next resistance level of 1.3847.

Ahead in the day, traders will focus on Canada's housing starts for April, scheduled to release in a few hours.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

Centrist independent Emmanuel Macron has won the French presidential election in a decisive victory. With virtually all votes counted, Macron has taken 66% of votes in the second round runoff, compared with far-right populist Marine Le Pen's 34%. While the election outcome had been suggested in the pre-election opinion polls, financial markets still reacted positively as defeat of Le Pen signaled a diminished risk of Frexit, a real concern haunting politicians and investors across the globe after the surprising Brexit referendum and Donald Trump's victory in US presidency.

Abstentions and spoiled votes larger than Le Pen's total

Despite Le Pen's loss, it is the highest number of votes that far-right parties have ever received in modern French history. As she noted in the concession speech, she was 'designated the leading opposition force in this second round'. Turnout of this election was 65.4%, 6.6 percentage points lower than that in the 2012 runoff and the lowest since the second round of the 1981 election. The total number of abstentions and spoiled votes, at 12 million, was greater than 10.7 million received by Le Pen, underpinning the general public's discontent over the current political and economic environment in France.

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Macron to work on changing EU and modernizing economy

Unlike Le Pen, Macron is pro-EU but believes some changes are needed to make the institution strong. As he suggested in an interview prior to the election, 'I propose to restore the credibility of France in the eyes of Germany, to convince Berlin in the next six months to adopt an active investment policy and move towards greater solidarity in Europe'. Regarding immigration, Macron proposed to strengthen the EU's external borders and push for additional resources at the European Border. He added that 'security would 'not be better served by closing national borders'.

On the economy and the labor market, Macron's plan in modernization of the economy includes an investment program focusing on the digital economy and environmental protection. Transformations of the health care system and housing policies are also in his agenda. The government will launch labour-market reform in the coming weeks, aiming at simplification of the labour code, and reform of unemployment insurance and vocational training. The key any rhetoric is execution, though.

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Parliamentary election next

The next event in France is the Parliamentary election scheduled in June. Only with a parliamentary majority would the new President be able to fully implement his political agenda and designate his own PM and cabinet members. The first poll for the upcoming election, released last week, signaled Macron's En Marche! Movement is on track to win 249 to 286 seats. Centrist and conservative parties would win around 200-210 seats, the far-right National Front would win 15 to 25 seats while the Socialist left 28 to 43 seats.

Oil and precious metals continue their comeback in Asia as the market breathes a collective sigh of relief with Macron's victory.

OIL

Crude has opened on a positive note in early Asian trading, following on from the bounce from Friday's lows in Asia. Friday's collapse looks more stop-loss driven in hindsight rather than structural, given how quickly those losses were recouped. As such, oil may have seen the worst of the selloff for now, as the market turns its attention to the OPEC meeting at the end of the month.

Given the levels that Brent and WTI are trading now, it is almost impossible to see the production cut deal not being extended in some shape or form. However, this is only likely to maintain the status quo, given the supply dynamics. Unless of course the cuts are increased, a situation we view as extremely unlikely.

To the here and now, Brent spot trades at 49.50 this morning with resistance at 51.00 the 200-day moving average. Support is far distant down at 46.50 highlighting just how volatile black gold has been over the last week.

WTI spot trades at 46.75 with resistance nearby at 47.00 and then 49.00, a double top and the 200-day moving average. Support is found in the distance at 45.00 and 43.50.

PRECIOUS METALS

Gold has opened constructively this morning, trading higher to 1231 from a 1227 close New York close. The yellow metal appears to be the beneficiary of a “risk on” sentiment across the Asian markets following Macron's victory in the French presidential elections. Commodities, in general, have started trading in Asia on a very positive note as geopolitical uncertainty recedes in Europe.

Gold has key support at 1222, its 100-day moving average, with a break signalling a move to the 1200 region. Above, resistance lies at the 1240 area, a daily close above signalling a move back in a 1240/1260 trading range.

Silver has also started the day positively, up 0.5 percent from its New York close, trading around 16.4300 this morning. The picture, however, does not look so rosy when one zooms out to look at the year to date charts. Silver remains mired at the bottom of its longer term range after its spectacular crash from 18.6550 in mid-April. Two positive days does not a trend change make. From a technical perspective, silver will need to close above 16.8170 to give bulls renewed hope of brighter times ahead.

Silver has initial resistance at 16.5700, last Thursday's high. This is followed by 16.8170 with a daily close implying a possible move back above 17.0000.

Support is clearly denoted at 16.2100 followed by Decembers low at 15.6350.

EURUSD

The EURUSD had a bullish momentum last week, topped at 1.0998 and hit 1.1021 earlier today in Asian session. Price traded lower around 1.0970 at the time I wrote this comment but the recent bullish trend is likely to continue after price broke above the range area as you can see on my H1 chart below testing 1.1050 as nearest target. The bias is bullish in nearest term. Immediate support is seen around 1.0950. A clear break back below that area could lead price to neutral zone in nearest term but only a clear break back below 1.0850 would interrupt the current bullish trend testing the pre-gap level at 1.0730.

GBPUSD

The GBPUSD attempted to push lower last week bottomed at 1.2830 but failed to make a sustainable break below the H1 EMA 200 as you can see on my H1 chart below and closed higher at 1.2978. This fact keeps the bullish outlook. The bias is bullish in nearest term testing 1.3000 – 1.3050 area. Immediate support is seen around 1.2950. A clear break below that area could lead price to neutral zone in nearest term testing 1.2900 area but overall I remain bullish and any downside pullback should be seen as a good opportunity to buy.

USDJPY

The USDJPY had a bullish momentum last week topped at 113.04. The bias is bullish in nearest term. Price is still in a bullish phase but as you can see on my H4 chart below the pair is struggling around a trend line resistance which is a good place to sell with a tight stop loss above 113.05 as a clear break and daily close above that area would expose 114.00 or higher. Immediate support is seen around 112.50. A clear break below that area could lead price to neutral zone in nearest term testing 112.00 area or lower.

USDCHF

The USDCHF had a bearish momentum last week bottomed at 0.9853. The bias is bearish in nearest term testing 0.9813/00 area. Immediate resistance is seen around 0.9950. A clear break above that area could lead price to neutral zone in nearest term but key resistance remains at 1.0020 which remains a good place to sell with a tight stop loss. On the downside, a clear break and daily close below 0.9813/00 would expose 0.9750 area.

STOCKS

Emmanuel Macron wins the final round of the French elections to become the youngest president, winning by a fair margin of 65% to 35% against Le Pen, as per the preliminary results released yesterday.

Dax (12716.89, +0.55%) moved up half a percent to make fresh highs rising towards 12750 as mentioned last week. While the rally continues, we may see a rise towards 13000-13500 levels in the coming sessions. Near term looks strongly bullish.

Dow (21006.94, +0.26%) has moved up to close above 21000 and while that sustains we could expect a rise towards 21100-21200 levels in the near term. While above 21000, we may negate an immediate correction to 20800 levels. Near term is likely to remain bullish.

Shanghai (3082.69, -0.66%) has broken below our expected 3080 levels and while it is unable to bounce back immediately, we could see an initiation of a fresh fall towards 3000 and lower in the medium term. Near term looks bearish.

Nikkei (19795.19, +1.80%) opened with a gap up after the long holiday, breaking above 19620 on the upside. While it holds above 19620, we may expect a rise towards important resistance at 20000.

Nifty (9285.30, -0.80%) may test supports visible near 9250 and 9200 respectively in the next couple of sessions before again bouncing back towards 9400. A break below 9200 is needed to confirm a down move in the medium term. For now, a short dip to 9200 is expected before a bounce back.

COMMODITIES

Gold (1231) closed at itd week’s low on last Friday. It could test support at 1230 from where a bounce back is expected in the near term. If 1230 holds on a closing basis then sideways consolidation within 1230-1270 continues. Need to keep a close watch on the price action in Dollar Index (98.59) which could give some cue on further Gold direction. We will remain bearish while it is trading below 1265-70 levels and a close beow 1230 could open up 1186 levels as well.

Similar kind of chart has been formed in Silver (16.41) also as it is trading below 17 levels. The bias will remain bearish while it is trading below 17.50 levels though a possibility of a rise towards 17 levels can’t be ruled out due to short term oversold condition.

Copper (2.49) has found resistance at 2.54 levels. Only above 2.68, higher resistances of 2.80 can come into consideration. In the medium term 2.44 are going to be a strong support now but a close below that could open up 2.40-35 ;eves as well.

The energy segment is seeing mild profit booking at lower levels. The interim resistance of 49.20 in WTI and 51.30 in Brent might be tested within couple of sessions. As discussed in last week, the preference may remain bullish in the extreme short term due to oversold condition but the overall bias will remain bearish while Brent (49.84) and WTI (46.87) are trading below 53 and 51 levels respectively.

FOREX

The better than expected US NFP data and the defeat of the far-right candidate Le Pen against the Centrist Macron in the French Presidential election seem to have cancelled each other out as the majors remain in the same quagmire with no directional visibility.

Dollar Index (98.73) is trading just 9 pips away from the levels of 98.82 seen in the previous morning despite the US Jobs report release and the French election result coming in the meanwhile. Neither the support of 98.50-20 has been broken nor has the resistance of 99.50 been overcome in the last 11 sessions which keeps us still waiting for a breakout for directional clarity.

Similar indecision is visible in Euro (1.0976) too, which is almost unchanged in the last 24 trading hours. A Macron win was expected to strengthen the currency but despite the win coming true, it has been unable to rise above the major resistance of 1.10 so far and just like Dollar Index, we wait for a breakout, either above 1.10 or below the support of 1.0890.

Dollar Yen (112.76) is in the same boat as the other majors mentioned above as it wanders just below the major resistance of 113.00. Still, the collapse of volatility signals a trending move to emerge within this week and the success or failure at 113.00 may determine the near term path. Waiting and watching continues.

Pound (1.2954) has made a high at 1.2984 in the last trading session, very close to our immediate target of 1.3000, above which opens up higher targets of 1.33-34 but it may take time. Support comes at 1.2880 and 1.2830.

Aussie (0.7397) is trying to find its feet after testing the support of 0.7370 but it is not clear yet if it is going to be successful or not. As discussed on last report, failure to hold 0.7370 may open up much lower levels of 0.7300 but the chances of a bounce back can’t be fully discarded yet.

The weekly close of Dollar Rupee (64.37) took place just below the immediate resistance of 64.40 and the current NDF rate of 64.30 points to further sideways consolidation in the range of 64.00-64.40 till a break above 64.40 materializes this week.

INTEREST RATES

The German yields are all trading higher after the preliminary results show a win for Macron against Le Pen in the 2nd round of the French elections. The 5yr (-0.30%), 10Yr (0.417%) and the 30Yr (1.19%) are all up from levels near -0.35%, 0.415% and 1.15% respectively. But the medium term charts show decent resistance near current levels and while that holds, the yields could come off after the next 4-5 sessions.

The US yields are trading higher. The 5Yr (1.90%), 10Yr (2.36%) and the 30Yr (2.99%) are trading higher from previous levels of 1.88%, 2.35% and 2.98% respectively.

The German-US 10Yr (-1.95%) and the 2yr (-2.03%) continue to trade above the immediate support levels and while they continue to move up, Euro could also move up in the near term. Note that 1.10 is a crucial levels for Euro and if that holds, the yield spreads could come off as well in the next 2-3 sessions. Need to keep a close watch on all of these.

The Japan-US 10Yr (2.34%) is moving up and while it is headed upwards, Dollar-Yen could strengthen in the near term.

EURUSD - With the pair continuing to hold on to its upside pressure, more strength is envisaged. Resistance comes in at 1.1050 level with a cut through here opening the door for more upside towards the 1.1100 level. Further up, resistance lies at the 1.1150 level where a break will expose the 1.1200 level. Its weekly RSI is bullish and pointing higher suggesting further upside pressure. Conversely, support lies at the 1.0950 level where a violation will aim at the 1.0900 level. A break of here will aim at the 1.0850 level. All in all, EURUSD faces further bull threats.

CRUDE OIL - With the commodity halting its weakness to close higher on a rejection candle on Friday, further bullishness is likely. On the downside, support resides at the 46.00 level where a break will expose the 45.50 level. A cut through here will set the stage for a run at the 45.00 level. Further down, support resides at the 44.50 level. On the upside, resistance resides at the 47.00 level. Further out, resistance comes in at the 47.50 level. A break above here will aim at the 48.00 level and then the 48.50 level followed by the 52.00 level. All in all, CRUDE OIL remains biased to the upside on correction

Normalcy Returns to Currency Markets

A sense of normalcy has returned to the Forex desks this morning as the final round of the French elections had the expected results. While this morning’s currency movements have been rather subdued, most of the early fanfare was about pre-positioning on risk trades if anything else, as EURJPY traded 124.55 USDJPY 113.10. And while US equity futures opened a touch higher, the overhang from last week’s oil price action is still too fresh in investors’ minds to press higher into uncharted territory this morning.

European equity markets had a bounce in their step heading into the weekend and we expect this positivity to hold near term. I suspect the bigger question for the Forex market will be the interest rate markets reaction to the Macron victory and how the ECB views the current landscape. After round one of the French elections, ECB previously acknowledged that political risks are petering out and data releases remain stable, but Draghi is still unwilling to tack too far off their charted course. Until there’s a definitive change in the ECB stance, the EURUSD upside momentum could struggle. Markets need some hint of policy convergence from the ECB to kick the long EUR trade into high gear.

Friday’s US non-farm payroll data did little to excite the Dollar bulls. While the headline print came in above consensus, a despondent wage growth component has weighed on dollar sentiment. However, headline data is very consistent with the Federal Reserve Board’s message, as the strong labour market paves the way for a June interest rate hike.

In China, we have key trade data coming out today. This print will be closely monitored as concerns ratchet higher over China’s tightening of financial conditions. Over the weekend, it was reported that Chinese FX reserves rose for a third straight month, which is more than markets had expected. FX reserves rose USD21bn to 3.03tn in April vs. consensus expectations of 3.02tn. The Yuan has been incredibly stable this year’s the US dollar ascent has tempered and capital outflows are receding.

WTI

I guess the big question for commodity traders is what next for oil prices? I think one takeaway from Friday’s oil price tumble was the lack of panic in the equity market. That, despite the significant drop in equity sector stocks, in general, major indices remained relatively composed and the currency market, as a whole, behaved in a contained manner.

The near-term outlook is clouded as a mix of bargain hunters play au contraire. The catalyst that triggered the wave of negativity on Friday, the global supply gut, is real and showing little signs of shrinking. Clearly, OPEC is unable to turn the oil markets upside down as they’re done in the past. While we may have seen the worst of the near move, the supply concerns are still with us and WTI will struggle to regain the $50.00 mark near term, despite a possible extension of OPEC production cuts at month’s end.

Australian Dollar

The Aussie is still feeling the overhang from the latest commodity unwind, which is weighing on any upward momentum. Until base metals show signs of convincingly reversing higher, I expect the Aussie bulls to remain very defensive. In this equation, China will be the force majeure, as the market is still deeply concerned with mainland’s weaker economic data in the face of rising domestic interest rates.

On the plus side for risk, there has been little contagion from last week’s oil price plummet, as the global equity market remained buoyant.

In early trade, the Aussie has breached the .7400 handle on very disappointing Australian Building approvals for March coming in at -13.4 % vs -4% expected

Japanese Yen

With much of the French election storyline priced in this morning, USDJPY bounces above 113.0 on risk appear to be unwinding, as the markets pivot back to last Friday’s weaker than expected average hourly wages component of NFP. However, much of this morning reversal has much to do with the unwinding this morning of the EURJPY trade, which topped near 124.50 in early trade.

Euro

There are no real surprises this morning as the markets had priced in this outcome. Now dealers will pivot back to the ECB expectations while taking profit on the long EURUSD, as there was little follow through on EURUSD topside this morning.

Well that's that. There will be no Trump or Brexit moment in France and stability inside the Eurozone remains.

Not to mention stability of EUR/USD.

Here are the results as of this morning:

Yes, Emmanuel Macron has pulled off an extraordinary election victory!

Just one year ago, his political party didn't even exist. Now with Macron at the helm, they're governing France. A truly amazing story.

Le Pen's National Front, while offering right leaning change, is still seen as ‘toxic' in the eyes of many French voters, even those on the right. This reputation proved too much in convincing the mainstream.

But lessons will be learned and by beating out the two historically established parties, this shows that the appetite for right wing change is still alive and well.

Taking a look at the Euro, the EUR/USD triangle broke out to the upside on a gap-up, but was quickly smashed back down as soon as the market opened.

EUR/USD Daily:

Zooming in and we can see how quickly the gap was filled:

EUR/USD 15 Minute:

It's always hard to predict whether this is going to be one of those times, but with EUR/USD rallying as hard as it did following the first round, this was a huge buy the rumour, sell the fact trade.

We have our horizontal range support/resistance levels in place. How do you think it's going to react off them from here?

France elected Emmanuel Macron President with a larger-than-anticipated margin on Sunday and the euro opened above 1.1000. The euro was also the best performer last week while the yen lagged. CFTC positions showed narrowing GBP shorts. After closing our EURUSD long at a profit on Friday, we opened a new long ahead of today's elections, while sticking with the cable long from 2 weeks ago.

With most votes counted, Macron leads the election with more than 64% compared to 36% for Le Pen. His victory underscores how markets and many commentators failed to understand France. It's also a reminder that while the political sands are shifting globally, the regional differences are profound.

His win was no surprise although email leaks late Friday added some angst. There was always the minute risk of a shock win for Le Pen but more than anything, the reason for the small euro climb at the open was that the margin of victory exceeded the 60-40% anticipated.

At times like this, markets often focus on the message from the incoming President but we believe Le Pen's comments are more profound. She said her party must reinvent itself and there is talk that will start with a new name. But more important was a hint of what's to come from her father, who was the former partly leader. He said her message was undermined by threats to quit the euro and EU.

If he's right (and if he's reading the political mood correctly) then populist voices across Europe might begin to redirect their energy away from the euro and more towards immigration or economic nationalism. That will leave the currency far less vulnerable in future elections. In the short term, it's a better potential reason to buy the euro than Macron's win alone.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

EUR -2K vs -21K prior GBP -81K vs -91K prior JPY -23 vs -27K prior CHF -18K vs -17K prior CAD -48K vs -43K prior AUD +43K vs +43K prior NZD -12K vs -15K prior

The market continued to pile into Canadian shorts through Tuesday but the sharp retracement on Friday and bounce in oil prices showed the danger of joining in a crowded trade. Meanwhile, the exodus from cable shorts continues as it flirts with 1.30.