The euro has edged lower against the dollar, pressured by nervousness over the upcoming French presidential elections as investors took stock of recent polls showing a tightening race between candidates. Sonia Legg reports
He's an outside bet but Jean Luc Melenchon has added more uncertainty to the French Presidential election. The country's borrowing costs hit their highest level over Germany in six weeks as polls showed the far-left candidate's popularity had risen. A few months ago it was the prospect of the far right's Marine Le Pen winning that was worrying investors. Then Emmanuel Macron - standing as an independent - brought some relief. (SOUNDBITE) (English) GLOBAL FINANCIAL ECONOMIST, COMMERZBANK, PETER DIXON, SAYING: "There are indications that French corporates are making a little bit of provision for political risk in the sense that they are getting a lot of their business done ahead of the election but I don't think investors outside of France are particularly concerned." Melanchon isn't quite as big a risk to the EU as Le Pen. He simply wants to overhaul it not hold a referendum on leaving it. But after Brexit and Trump few are willing to rule out the possibility of a shock. Citi, Deutsche Bank and JP Morgan all put Le Pen's chances at 25 percent while UBS says it's more like 40 percent. Macron is the clear favourite in every case, despite his relative youth and inexperience. (SOUNDBITE) (English) GLOBAL FINANCIAL ECONOMIST, COMMERZBANK, PETER DIXON, SAYING: "Inexperience doesn't necessarily have to be a bar to office, think about Thatcher when she came to office in 1979 or Ronald Reagan a year or two later, but certainly a lot depends on the policies he wants to put in place." France could do with few growth boosting ones after the election. The Bank of France has just revised down its GDP outlook for the first quarter to 0.3 percent from 0.4. But investor sentiment in the wider euro zone is shrugging off the election risks. The latest index from Sentix was three points above consensus forecasts and close to a 10 year high.