Euro Falls to 17-Month Low as France Concerns Weigh on Markets
The euro slipped to a 17-month low on Monday as investors grew increasingly concerned about France’s worsening fiscal position and political uncertainty ahead of next year’s presidential election. The currency fell as much as 0.8% to $1.1160 before recovering to around $1.1202. French stocks also weakened, while the premium on French 10-year bonds over German debt remained elevated, reflecting growing concerns about the country’s finances.
The dollar gained 0.3% against a basket of major currencies, supported by higher U.S. Treasury yields and continued demand for U.S. assets. However, weaker-than-expected U.S. jobs data reduced expectations of a Federal Reserve rate hike this month. Investors now see only an 18% probability of an October rate increase, down sharply from 64% a week earlier. Asian markets responded positively, with Japan’s Nikkei rising 2.4%.
Brazilian markets, meanwhile, were set for a strong rally after Senator Flavio Bolsonaro advanced to a presidential runoff against incumbent Luiz Inacio Lula da Silva after outperforming polling expectations. A Brazilian exchange-traded fund jumped 15% in Frankfurt, while the Brazilian real was expected to strengthen on hopes of a more business-friendly policy direction. Oil and gold prices also edged higher amid ongoing geopolitical and supply concerns.
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