French bond turmoil helps push euro towards a fourth weekly loss against the dollar
The euro is heading for a fourth consecutive weekly decline against the dollar, as elevated US Treasury yields and selling in French and Italian bonds weigh on the single currency, Reuters reports. France’s 10-year yield premium over Germany rose above 150 basis points, its highest since late 2011; the euro was last quoted at $1.12580 (€1.03).
Bottom line — France’s bond spread above 150 basis points is adding to pressure on the euro as markets weigh ECB rate risks.
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Reuters reports the euro’s four-week losing streak would be its longest since mid-May 2025.
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French 10-year yields reached their highest level since 2002, Reuters reports, amid worries about the country’s finances and political uncertainty ahead of 2027 elections.
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Reuters says euro-zone inflation is expected to rise in coming months, keeping pressure on the ECB to raise rates.
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The dollar’s support also comes from higher oil prices; Reuters reports some investors have reduced exposure to currencies of major energy importers, including the euro and yen.
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September US job growth fell short of economists’ expectations and unemployment edged up to 4.2%, Reuters reports; traders put the chance of the Fed holding rates steady this month at 86%, up from 36% a week earlier, according to CME Group’s FedWatch tool.
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Nomura’s Dominic Bunning described the jobs figures as resilient without significant inflationary pressure, saying they reduced some risk of another Fed hike in October.