Euro hits six-month high

The euro touched six-month highs on Friday, while not being able to break above the psychologically important $1.10 threshold ahead of the decisive round of the French presidential election on Sunday.

Market players appeared to be expecting centrist Emmanuel Macron to see off the challenge from far-right candidate Marine Le Pen, who had said she would withdraw France from the eurozone's single currency.

She did make the distinction, though, between a new currency for daily use and the euro that she said would be retained "for large companies that trade internationally."

With markets deeming a Le Pen victory unlikely, the euro has been able to gain nearly 2.5 percent over the past two weeks, hitting a high of $1.0990 in morning trading in Europe on Friday.

Yen a safe haven

Valentin Marinov from Credit Agricole in London told Reuters the easing of political risk in Europe should support the euro becoming even stronger against the greenback.

[A Macron win] "will allow investors to refocus their attention on the rather resilient eurozone fundamentals at the moment, the improving growth outlook picture as a whole and indeed the fact that the European Central Bank will take more steps ever closer to tapering its quantative easing purchases," Marinov said in a statement.

In other parts of the world, commodity-linked currencies took their cues from a slide in oil prices. The greenback dropped 0.2 percent against the Japanese yen.

"I think it's just a direct correlation with oil prices and a little bit of risk aversion coming into the dollar/yen exchange rate," FX broker Oanda's Stephen Innes argued.

hg/sri (Reuters, dpa)