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France's political deadlock is turning around, the euro has taken a temporary breather but still faces long-term tests
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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Market xn--xm-5s9cx14e.commentary]: France's political deadlock is turning around, the euro has temporarily taken a breather but still faces long-term tests." Hope this helps you! The original content is as follows:
France's Macron was originally scheduled to hold a head of government election on Friday (October 10) to select a leader to lead the country out of the political deadlock. This move has temporarily avoided a new round of elections.
French politics has been in a deadlock since Macron took the risk of calling an early election last year - he hoped to consolidate power, but the result was a hung parliament and a surge in far-right seats.
Informed sources revealed that Macron was originally scheduled to meet with the leaders of all political parties except the far-right National Alliance and the radical left-wing French Party at 20:30 Beijing time on Friday at the Presidential Palace.
Macron’s office said he would choose a new prime minister on Friday night. It xn--xm-5s9cx14e.comes after his seventh prime minister, Sebastian Le Corni, resigned on Monday amid months of deadlock over an austerity budget.
The centrist president is facing the most serious domestic crisis since taking office in 2017 and has yet to speak to the public.
Leconi, a loyal supporter of Macron, agreed to stay on for two more days to consult with the political parties. He told French television on Wednesday night that he was optimistic that the new cabinet would be able to pass the spending bill through parliament.
His two predecessors resigned over a stalemate over spending bills, and his new cabinet, unveiled on Sunday, has been criticized for failing to make a clean break with the past.
Le Corne, who has served as defense minister for three years, did not reveal who will be the next prime minister.
He claims his mission is accomplished, but some politicians believe the president could reappoint him at the risk of angering the opposition and triggering another no-confidence vote.
But the 74-year-old centrist said on Thursday that he had no knowledge of it and had "zero" contact with the president's office.
Will former Socialist Prime Minister Bernard Cazeneuve be the right candidate? Or could another Socialist, Pierre Moscovici, the head of France's supreme audit agency, help put the country's finances in order?
Shouldn’t there be ambition?
Le Kearney said that the revised 2026 budget draft may be submitted to the Council of Ministers for consideration next Monday, which is the deadline for the bill to be passed by Parliament before the end of this year.
This means that the new cabinet will be announced before the end of this week.
Leconi proposed on Wednesday that a more technocratic government could be appointed, whose members should not have the "ambition" to participate in the 2027 presidential election.
As the crisis escalates, former allies also begin to criticize the president.
Former Prime Minister Edouard Philippe - one of the contenders in the next presidential election - said earlier this week that Macron should step down after the budget is passed. But Macron has insisted on staying in office until the end of his term.
Far-right party leader Marine Le Pen refused to participate in the negotiation talks initiated by Le Corni this week. She said on Wednesday that she would obstruct all policy measures of the new government and "vote against all bills."
Le Pen's anti-immigration party "National Alliance" believes that as Macron has served two terms as president, the 2027 election will usher in the best historical opportunity for the party to take power.
Le Pen is barred from running after being convicted in a corruption case, but her 30-year-old deputy Jordan Bardella may become an alternative candidate.
Analysis of the potential impact on the euro
The formation of a new government instead of early elections temporarily eliminates the direct risk of further growth of far-right forces through votes and alleviates market concerns about political control in the Eurozone's second largest economy. This provides the euro with short-term breathing space and short-covering momentum.
Former Prime Minister Le Corny's proposal to form a technology-based government with "no political ambitions", if true, may be seen as a pragmatic signal xn--xm-5s9cx14e.committed to solving fiscal problems and help stabilize market sentiment.
Even if a new government is formed, its ability to push legislation through a hung parliament remains in doubt. Le Corny's two predecessors both resigned due to the budget impasse. Whether the new government can break this curse is the key to assessing the mid- to long-term trend of the euro.
Le Pen, the leader of the National Alliance, has made it clear that he will "vote against all bills", which means that any major legislation of the new government will face many obstacles. This continued internal political confrontation will restrict France's ability to implement necessary reforms and pose continued pressure on the potential value of the euro.
Macron has become a "lame duck" president and his political influence is declining. Political forces, especially the covetous far right, have xn--xm-5s9cx14e.completely turned their focus to2027 general election. French politics in the next three years will be full of internal strife, which will long-term weaken the political foundation of the euro as a unified currency.
Under the pressure of political xn--xm-5s9cx14e.compromise, it may be difficult for any government to implement strict fiscal austerity. The market will pay close attention to whether the revised 2026 budget draft has sufficient fiscal discipline. If it disappoints, it may push up the interest rate difference between French and German government bonds again, putting pressure on the euro.
The market reaction was obvious during the European trading session on Friday. The euro against the US dollar did not continue the downward trend of the previous four trading days, but strengthened slightly, reflecting the fundamental support for the euro.
The above content is all about "[XM Foreign Exchange Market xn--xm-5s9cx14e.commentary]: France's political deadlock is turning for the better, the euro has temporarily taken a breather but still faces a long-term test". It was carefully xn--xm-5s9cx14e.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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