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Euro falls after France's Juppe pulls out of election race

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The euro fell on Monday after former French prime minister Alain Juppe said he was not prepared to be a candidate in the country's presidential elections, with investors worried that made a victory by anti-EU leader Marine Le Pen more likely.

[LONDON] The euro fell on Monday after former French prime minister Alain Juppe said he was not prepared to be a candidate in the country's presidential elections, with investors worried that made a victory by anti-EU leader Marine Le Pen more likely.

An opinion poll on Friday had suggested that if Juppe were to replace the beleaguered Francois Fillon as the centre-right candidate, he would win the first round of the election, with centrist candidate Emmanuel Macron coming second - a scenario that would knock Le Pen out of the race.

Having earlier traded slightly higher on the day, the euro hit the day's lows, falling to US$1.0591, down from US$1.0621 just before Mr Juppe's announcement.

"The euro is correlating very well with the chances of Le Pen winning or not winning - that's very much the euro trade at the moment," said Mizuho's head of hedge fund FX sales in London, Neil Jones.

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"Anything that makes Le Pen winning more likely sends the euro lower."

French government bond yields edged up on the news, with the gap between 10-year French yields and their German equivalents widening to almost 64 basis points, off a one-month low hit on Friday just below 58 bps.

REUTERS

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