* Euro eases from 6-month high vs dollar, 1-year high vs yen
* Dollar index rises above 6-month low plumbed earlier
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Ritvik Carvalho
LONDON, May 8 The euro retreated on Monday from
highs hit on centrist Emmanuel Macron's victory in France's
presidential election, with investors taking profit on a roughly
3 percent gain for the currency since he won the first round two
Macron's resounding defeat of nationalist Marine Le Pen has
relieved investors who had feared another populist upheaval
after Britain's vote to exit the European Union and Donald
Trump's election as U.S. president last year.
But after opinion polls had shown Macron consistently around
20 percentage points or more in front, his crushing victory on
Sunday was widely expected.
"Clearly it (the euro) is off the overnight highs and I
think this is purely because the win that we had in France was
so well priced in," said Jane Foley, currency strategist with
Rabobank in London.
In early Asian trading the euro rose as high as $1.1024
, its highest since Nov. 9. It also jumped to a one-year
high of 124.58 yen against its Japanese counterpart,
and a five-month high of 1.0886 Swiss franc.
By the European morning, it had fallen back 0.4 percent to
$1.0953 against the dollar, and 0.6 percent to 123.26 yen.
The removal of the political risk investors had associated
with Le Pen - who had promised to take France out of the euro -
leaves them refocusing on economic fundamentals and the relative
pace of monetary policy normalisation in Europe and the United
Friday's U.S. job numbers were solid and yield spreads
continue to back the dollar over the euro. But traders are also
steadily more confident about the prospect of the European
Central Bank at some point moving away from its bond-buying
"Over the next couple of months, the market will turn its
attention back to the economy, back to the debate about whether
the European Central Bank can lift some of its accommodation
perhaps early next year," Foley said.
The dollar was slightly lower on the day at 112.56 yen
, after jumping to a seven-week high of 113.14 yen in
The dollar index, which tracks the U.S. currency against a
basket of six major rivals, added 0.2 percent to 98.812,
after dipping as low as 98.543 earlier, its lowest since
The French election eclipsed Friday's U.S. employment data,
which showed nonfarm payrolls rose by 211,000 in April. The
unemployment rate fell to 4.4 percent, near a 10-year low and
well below the most recent Federal Reserve median forecast for
But job growth in March was revised downward to 79,000 from
98,000, and the labour force participation rate dipped slightly
to 62.9 percent from 63 percent. Overall, the figures did not
appreciably alter market expectations that the U.S. Federal
Reserve is on track to raise interest rates next month, with
analysts citing a slack in wage growth.
"The gap between labor market development and wage
development is still gaping and is only being reduced at a
snail’s pace. Market participants who had expected that an
unemployment rate that was long term below 'normal' levels (i.e.
a labor market running hot) would finally fuel wage inflation
are slowly running out of patience," Commerzbank strategists
wrote in a note.
"If this connection does not soon start to work a good labor
market report will not support the dollar. "
U.S. retail sales and core inflation data will be released
on Friday this week, and they could add to evidence backing
expectations of a Fed hike.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Reporting by Ritvik Carvalho; additional reporting by Tokyo
markets team; Editing by Mark Trevelyan)