Folks are pretty damn sure that Marine Le Pen has no chance of pulling off a historic upset in Sunday’s French presidential runoff.
And God help us all if for some reason she were to mount some kind of come-from-behind rally at the last minute. As we detailed on Friday evening in “The World Is Going Batshit Crazy — Thoughts Ahead Of A Big Weekend,” a vote for Le Pen is vote for an ideology that is so profoundly bigoted that one wonders why Marine’s last name wasn’t banished from French politics long ago.
In any event, markets are essentially acting as though a Monday morning, celebratory risk-on move is a foregone conclusion. That would most likely start in Australasia with a sharp move higher in EURJPY (it seems like some traders would prefer that to EURUSD as a “cleaner” bet given the policy divergence between the Fed and the BoJ).
There are a number of different visuals you can look at to see how confident this market truly is, but one of the most straightforward ways to assess the situation is simply to look at the latest positioning data (out Friday afternoon) which shows that asset managers have taken their EUR net longs to the highest level in at least a decade…
(Deutsche Bank, CFTC)
…while the net spec short was trimmed by 19K contracts to damn near flat:
(Deutsche Bank, CFTC)
So that’s your setup.
It should be an interesting 48 hours.
” a vote for Le Pen is vote for an ideology that is so profoundly bigoted that one wonders why Marine’s last name wasn’t banished from French politics long ago.”
As long as there are bigots, there will be bigoted politicians.
Don’t hold your breath.