Data from CLS shows that the first round of the French presidential election caused a much stronger reaction in the spot FX market than the second round.
The data shows that there was a significant spike in volumes following the first round of voting. Ahead of the vote, polls were showing a statistical tie for the top four candidates, and therefore the result was much more uncertain.
Before polling was suspended by law on Friday, 21 April 2017, Bloomberg’s composite of French polls showed Emmanuel Macron in the lead with 24.5 % and Marine Le Pen in second place with 22.5% of the vote. With Francois Fillon and Jean-Luc Melenchon having the backing of 19.5% and 18.5% of the electorate, respectively, the margins of error left room for upset. Market participants were worried that the two EU-sceptic candidates – Le Pen and Melenchon – could have won the first round
Trading volumes didn’t react so much to the results from the second round. CLS suggests that this could be because Macron’s victory over Le Pen was, to a great extent, already priced in following the first round – a snap poll released on 23 April suggested that Macron would defeat Le Pen by more than 20% in the second round and this polling difference between the two candidates stayed relatively constant until the second round.