(Bloomberg) — The euro fell after initial projections showed a left-wing coalition was set to win the French legislative election, sowing worries about the nation’s finances. Asian shares declined.

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The common currency slid as much as 0.4% in early trading as the left-wing New Popular Front was poised to garner the most seats in parliament, with Marine Le Pen’s far-right National Rally — which had been widely expected to win the most seats — seen coming in third, after President Emmanuel Macron’s centrist alliance. French government bond futures underperformed their German peers.

One of the NPF bloc’s leaders, Jean-Luc Melenchon, has pledged the group will refuse to negotiate with others to form a government and won’t compromise on its plans, including a major increase in public spending, measures that would provoke a major clash with the European Union.

“The show of support for the left/far-left and calls by far-left leader Melenchon to enact the full hard-left NFP agenda will unsettle some investors,” Evercore ISI strategist Krishna Guha wrote in a note to clients. “But we view the outcome as broadly market-friendly, with National Rally-related risks disappearing for now and the left/far-left NFP set to fall far short of a majority with essentially no prospect of being able to enact its agreed alliance agenda.”

Asian shares retreated. South Korea’s three-year bond futures rose to their highest levels in nearly two years. Samsung Electronics Co. workers are expected to walk off assembly lines Monday, beginning the biggest organized labor action in the South Korean conglomerate’s half-century history.

The People’s Bank of China said it will carry out temporary bond repurchase or reverse repurchase operations depending on the market situation on working days between 4 p.m. and 4:20 p.m., aiming to maintain reasonable and sufficient liquidity in the banking system, it said in a statement on Monday.

Federal Reserve Chair Jerome Powell’s congressional testimony and US inflation data arrive later this week. Traders will be looking to the two events to solidify bets policy easing could begin as early as September amid signs the US economy is cracking after a soft jobs report.

The prospect of a Fed cut to interest rates in coming months got a boost on Friday after nonfarm payrolls data showed US hiring and wage growth stepped down in June, while the jobless rate rose to the highest since late 2021.

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“The good news for risk is that we are still at levels of growth, consumption and labor readings that largely say if the Fed are to ease, it’s because of risk management purposes,” Chris Weston, head of research at Pepperstone Group, wrote in a note to clients. “It’s when the market feels the Fed needs to ease beyond neutral and to stimulate the economy that earnings estimates are chopped up, and equity typically goes into prolonged drawdown.”

In the US, President Joe Biden faces a fresh round of hazards from members of his own party as he seeks to salvage his embattled reelection bid and fend off calls from Democratic lawmakers to step aside. Biden registered his best showing yet in a Bloomberg News/Morning Consult tracking poll of battleground states, even as voters offered withering appraisals of his debate performance.

US Election Day volatility has declined since the debate between Biden and his challenger Donald Trump, according to RBC strategist Amy Wu Silverman.

“One interpretation: Markets (and polls) are pricing a decisive Trump victory. Using the 2016 playbook, this is a net positive for markets,” she wrote in a note Sunday. “And yet if you look to Trump’s policy statements on tariffs, immigration and perhaps even the independence of the Federal Reserve — these are arguably all vol-generating.”

Elsewhere this week, traders will be watching rate decisions in New Zealand and South Korea. Earnings from major US banks including JPMorgan Chase & Co. are due, while Powell is set to deliver his semi-annual testimony on Capitol Hill on Tuesday, followed by a slew of Fed speakers.

In commodities, oil ticked up ahead of reports from the Organization of Petroleum Exporting Countries and the International Energy Agency this week that will shed light on global crude balances, with traders also tracking Tropical Storm Beryl’s path as it approaches Texas. Gold eased off the six-week high hit last week.

Key events this week include:

• Indian Prime Minister Narendra Modi visits Moscow, Monday

• Fed Chair Jerome Powell delivers semi-annual testimony to the Senate Banking Committee, Tuesday

• US Treasury Secretary Janet Yellen testifies to the House Financial Services Committee, Tuesday

• Fed Vice Chair for Supervision Michael Barr, Governor Michelle Bowman speak, Tuesday

• China PPI, CPI, Wednesday

• Japan PPI, Wednesday

• Fed Chair Jerome Powell testifies to the House Financial Services Committee, Wednesday

• Chicago Fed President Austan Goolsbee and Fed Governor Michelle Bowman speak, Wednesday

• BOE chief economist Huw Pill, BOE policy maker Catherine Mann speak, Wednesday

• US CPI, initial jobless claims, Thursday

• Atlanta Fed President Raphael Bostic, St. Louis Fed President Alberto Musalem speak

• Japan industrial production, Friday

• China trade, Friday

• US University of Michigan consumer sentiment, PPI, Friday

• Citigroup, JPMorgan, Wells Fargo and Bank of New York Mellon report quarterly earnings, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.2% as of 10:09 a.m. Tokyo time

• Japan’s Topix fell 0.5%

• Australia’s S&P/ASX 200 fell 0.4%

• Euro Stoxx 50 futures were little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro fell 0.2% to $1.0823

• The Japanese yen was little changed at 160.68 per dollar

• The offshore yuan was little changed at 7.2917 per dollar

Cryptocurrencies

• Bitcoin fell 4.6% to $54,617.72

• Ether fell 5.1% to $2,847.03

Bonds

Commodities

• West Texas Intermediate crude fell 0.3% to $82.93 a barrel

• Spot gold fell 0.2% to $2,388.11 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Michael G. Wilson and Matthew Burgess.

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