France won't choose its next president until Sunday. But investors have already picked their winner.
Market moves suggest that investors expect independent centrist Emmanuel Macron to triumph in the presidential runoff, an outcome that would remove the risk of France dropping the euro anytime soon.
Macron has for weeks maintained a commanding double-digit lead over far-right rival Marine Le Pen in the opinion polls.
But Le Pen, who is hostile to the euro and free trade, had a chance to change the narrative on Wednesday, when the the pair faced off in a contentious televised debate. Analysts and opinion polls, however, concluded that Macron got the better of the National Front leader.
Investors agreed: France's benchmark stock index jumped 1% on Thursday to reach its highest level in nine years. The euro also received a post-debate bump, surging 0.4% against the dollar.
"The final French presidential debate has been described as messy and brutal this morning, but it's hard to see it changing the opinion poll picture much," said Kit Juckes, a strategist at Societe Generale.
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During the debate, Le Pen struggled to defend her proposal to ditch the euro -- a plan that has long unnerved investors.
"We need to get our national money back, this is essential," said Le Pen. "I want us to break free from the euro."
Le Pen said that France could perhaps use two currencies: the euro and the French franc.
Macron countered by raising questions over how French workers would be paid -- in euros or francs? And he asked which currency would be used to pay France's creditors? (Ratings agencies say that Le Pen's plan would result in a default.)
Le Pen did not appear to have a response.
France has long been a pillar of support for the euro, and the currency's continued survival would be in doubt if France were to abandon it. Economists have also warned of economic catastrophe for France itself should it make a hasty exit from the eurozone.
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Markets appear to have concluded following the debate that France -- and the euro -- are safe for now.
The difference in yields on French and German government bonds has decreased in recent days, suggesting that investors see French debt as a less risky bet.
Juckes said that the positions held by currency traders suggest an 80% chance of a Macron win.
Still, there are others who prescribe caution, especially in the era of Trump and Brexit.
Kathleen Brooks, research director at City Index, said markets could remain nervous about the future of the euro even if Macron does win.
"If the election result is close then Le Pen is likely to remain a powerful voice in French politics, and her desire to ditch the euro could remain part of French political discourse for some time," she said.
