Even with gold’s momentum, a 5% or 10% correction can happen Natixis’ Dahdah

After falling short of a majority in last year's snap legislative vote, French far-right leader Marine Le Pen said her party's victory had merely been delayed.

Fifteen months later, with the fallout of that vote having plungedFranceinto a chronic crisis, Le Pen and her National Rally (RN) sense their moment is nearing as Macron tests the limits of his power to avoid further elections.

The RN's continued ostracisation from mainstream politics has positioned it as a leading beneficiary of the rumbling malaise. By watching the crisis unfold from the sidelines, it has been able to pick up disgruntled voters.

FAR RIGHT AHEAD IN THE POLLS

A Wednesday poll by OpinionWay for the right-wing CNEWS channel found that around 35% of French people planned to vote for the RN in the first round of a possible legislative vote, 10 points ahead of a broad leftist alliance if it were to regroup.

While that is hardly an electoral tsunami - the RN was polling just slightly lower before the 2024 vote - the party believes it can win, or come close to, a majority in a legislative vote should Macron call one.

It believes the electoral pacts between rival parties that stopped it from winning a majority in 2024 will no longer hold after months of partisan squabbling. A leftist alliance between the Socialists and hard-left "France Unbowed" has collapsed since the 2024 vote, while the "common platform" alliance between centrists and conservatives is on life support.

Although Macron will name a new prime minister this week, his next government's survival is far from guaranteed. Experts say a dissolution of parliament in the coming weeks - something Le Pen has repeatedly called for - cannot be discounted.

Le Pen has been clear that if her party falls far short of a majority, it will not seek the prime minister's office. If it got close, however, it would seek to lure rival lawmakers, most likely from the conservative Republicans party.

The RN has been fine-tuning its candidate list for months, seeking to avoid the antisemitic, Islamophobic and racist candidates who derailed its election hopes last year.

"The goal is to secure a majority, convince the French, and show that our policies will produce rapid results, that an antidote is possible," RN lawmaker Julien Odoul told Reuters.

FROM TABOO PARTY TO GOVERNMENT-IN-WAITING?

Once a byword for racism and antisemitism, the RN has been on a steady upward march since Le Pen sought to professionalise the party in 2017, and as anti-immigrant sentiment has become more mainstream. Although it remains toxic for many French, the party views itself as a government-in-waiting.

Le Pen's role in a potential future RN government is unclear. Her presidential hopes hang by a thread after she received a five-year political ban following an embezzlement conviction in March. Her appeal will be held in January, with a verdict expected before the summer.

If Macron dissolves parliament, she would almost certainly not be able to run again due to her political ban. While losing her parliamentary seat would be an inconvenience, it is unlikely to eclipse her political star, and she will still remain one of the loudest voices in French politics.

BARDELLA COULD OVERCOME TOXIC LEGACY

Should Le Pen's ban be upheld, and she cannot run for the presidency in 2027, she has said her political protege, 30-year-old party president Jordan Bardella, will run instead.

That may be no bad thing for the RN. The Le Pen family name reminds many in France of her father, who founded the party and was convicted of inciting racial hatred and condoning war crimes. He died earlier this year, aged 96.

His toxic legacy has contributed to the RN's failure to get over the line in France's two-round presidential votes, having lost the last two elections in run-offs.

According to a Toluna poll published on Wednesday, Bardella was seen winning 35% of votes in the first-round of a potential presidential election, while Le Pen was on 34%. Bardella was up five points on a previous May poll, with Le Pen up three points.

The sharp-suited Bardella, son of an Italian immigrant family who grew up in the rough outskirts of Paris, has polished the RN's reputation. He has also attracted younger, blue-collar voters hit by inflation and job insecurity to a party once known for an older, middle-class and arch-conservative clientele.

Source: TradingView

India’s central bank has ramped up its interventions in offshore currency markets to defend the beleaguered rupee, according to people familiar with the development.The Reserve Bank of India has built up short dollar positions of at least $15 billion in the non-deliverable forwards market over the past two to three weeks, the people said, asking not to be identified discussing private matters.That marks a firm return to a segment in which the central bank had steadily reduced its presence over the past year, they said.

The expanded intervention comes at a time when the currency is charting fresh lows against the dollar, weighed down by record outflows from local stocks and concerns over punitive US tariffs. With the rupee emerging as Asia’s worst performer this year, the central bank has also unveiled measures to enhance its global appeal.RBI Governor Sanjay Malhotra said last week that the central bank was keeping a close watch on the rupee’s movements and would take “appropriate steps” as warranted. That goes beyond the central bank’s usual statement on stepping in to curb volatility in the currency, according to economists from HSBC Holdings Plc.

The RBI resumed interventions in the non-deliverable forwards market in August and further stepped up the operations in September, particularly in the one-month segment, the people said. The central bank mostly stepped in before the local market opened at 9 a.m. in Mumbai, with the activity picking up whenever the rupee breached the 89-per-dollar mark in the offshore market, they said.The local currency’s one-month volatility against the dollar has fallen sharply this month, according to a Bloomberg gauge.

A spokesperson for the RBI didn’t respond to an email seeking comments.

Using offshore non-deliverable forwards has a number of advantages for central banks, including potentially lower costs and the fact that they don’t drain official reserves.That’s because the NDF contracts allow the central bank to influence the rupee’s levels without actually selling large amounts of dollars. Such interventions can also act as a signal of intent in the spot market, thus boosting the rupee when markets are volatile.

Source: Bloomberg Europe

Treasury Secretary Scott Bessent touted a drop in a key US fiscal ratio as evidence that President Donald Trump’s economic policies are working without causing a recession.

“The deficit-to-GDP now has a five in front of it,” Bessent said at a community bank conference hosted by the Federal Reserve Thursday. That’s down from a 2024 ratio “which was the highest when we weren’t at war or weren’t in a recession in US history.”

He spoke a day after the nonpartisan Congressional Budget Office published its estimate for September federal government spending and revenue figures, along with the full 2025 fiscal year numbers. Bessent noted the official Treasury data are delayed due to the current government shutdown, pending congressional passage of appropriations bills for the new 2026 fiscal year now underway.

The CBO estimated the budget gap for fiscal year 2025 was little changed from 2024, at $1.8 trillion. But using its estimate for gross domestic product, that helped shrink the deficit ratio to 5.9%. Treasury figures for 2024 show that measure was 6.4%.

Bessent has often said he decided to enter the public policy debate out of concern about an unsustainable trajectory for government debt. On Thursday he related an exchange he had with Trump about two years ago: “He looked at me, first thing, he said, ‘Scott, how are we going to get the debt and deficits down and not cause a recession?’”

Trump’s tariff hikes have spurred record customs duties, helping hold down the deficit. But the CBO figures showed spending continues to climb, while the administration’s corporate-tax cuts are eroding revenue. The agency also said interest on the public debt surpassed $1 trillion a year for the first time in 2025.

Bessent has said he wants to see the deficit ratio come down to “something with a three in front of it” by the end of Trump’s second term in office.

“We’re on our way,” Bessent said. “I think we saw that today.”

US Budget Deficit Seen at $1.8 Trillion by CBO, Despite Tariffs

Bessent also said he expects the Treasury to issue more tax refunds next year as a consequence of changes made to the tax code under Trump’s One Big Beautiful Bill. Those include no taxes on tipped wages for certain workers, lower taxes on Social Security disbursements and the ability to deduct interest payments on purchases of American automobiles.

“We expect to see substantial tax refunds beginning of next year, which I think will be accrued to lower-end consumers — for the bottom 50% who need the relief,” he said. “And concurrently, they will change their withholding schedule so their real take-home pay will be higher next year.”

Source: Bloomberg

Source: finance.yahoo

The dollar was mixed on Thursday as a selloff in the Japanese yen appeared exhausted for now, while the euro was dented by political uncertainty.

The yen reached its weakest level since mid-February against the greenback on concerns that Sanae Takaichi, the newly elected head of Japan's ruling party, will introduce more fiscally expansive policies.

But the yen got a modest bid on Thursday as traders evaluated how much room she will have to stimulate the economy.

“Traders are turning a little bit more sceptical on the Takaichi administration's capacity for passing fiscal stimulus and pushing back against the Bank of Japan's tightening plans,” said Karl Schamotta, chief market strategist at Corpay in Toronto.

“That's a reflection of underlying inflation dynamics in Japan. The reality is that Japanese households are agitating for change because inflation is running at elevated levels,” Schamotta said.

Takaichi said on Thursday she will immediately issue an order to compile a package of steps to cushion the economic impact of rising living costs once chosen by parliament to become next prime minister.

The dollar was last flat on the day at 152.67 yenafter earlier reaching 153.21, the highest since February 13.

The euro, meanwhile, has dropped since Prime Minister Sebastien Lecornu tendered his and his government's resignation on Monday. The political paralysis has made it challenging to pass a belt-tightening budget sought by investors that are increasingly worried by France's expanding deficit.

French President Emmanuel Macron’s office said on Wednesday he would appoint a new prime minister within 48 hours.

The single currency was last down 0.15% at $1.1608. The dollar index gained 0.15% to 99.00 and reached 99.10, the highest since August 1.

The dollar is being aided by some more hawkish commentary by Federal Reserve officials.

Minutes from the U.S. central bank’s September meeting released on Wednesday showed that officials agreed that risks to the U.S. job market had increased enough to warrant an interest rate cut but remained wary of high inflation.

“We are seeing a more hawkish tone from Fed policymakers, both in the minutes from September's meeting as well as ongoing commentary. And that's pushing back on market expectations for further aggressive easing,” said Schamotta.

Traders are pricing in a 95% chance that the Fed cuts rates by 25 basis points at its October 28-29 meeting, while the odds of an additional cut in December have dropped to 82%, from 90%, in the past week, according to the CME Group’s FedWatch Tool.

New York Fed President John Williams backs more interest rate cuts this year given the risk of a further slowdown in the labor market, he said in an interview published by the New York Times on Thursday.

Traders are also focused on how long the U.S. federal government shutdown will last, with the economy likely to take a bigger hit the longer it drags on.

The U.S. Internal Revenue Service said on Wednesday it will furlough more than 34,000 employees due to the government shutdown, effectively shuttering taxpayer call centers.

In cryptocurrencies, bitcoingained 0.44% to $123,478.87.

Source: TradingView

Source: reuters