Dollar at 17-month high as bond rout, French fiscal worries weigh on euro
SPY•The dollar index was at 101.93 and set for a 1% weekly gain, its third straight week higher, while the euro hovered near its lowest level in 17 months at $1.1237. Investors watched US payroll data after a global bond selloff and receding bets on an October Federal Reserve rate hike.
1. Dollar gains as euro weakens
The US dollar was headed for a third straight week of gains as a global bond selloff and concerns over French fiscal health weighed on the euro. The euro traded at $1.1237, near its lowest level since May 2025, while the dollar index stood at 101.93, up 1% for the week.
2. Yields and payrolls in focus
The US 10-year Treasury yield reached 5.344% on Thursday, its highest since 2002, before easing to 5.247% on Friday. Investors awaited US payroll data, with September job growth expected to slow and unemployment forecast at 4.1% for a third straight month. Traders priced in a 72% chance that the Fed would hold rates in October, up from 36% a week earlier.
3. Fiscal risk shapes trading
Currency strategist Moh Siong Sim said rising energy prices initially drove yields higher, but European fiscal concerns overshadowed that move. Strategist Charu Chanana said higher long-term yields despite reduced expectations for an immediate Fed hike pointed to term premium and fiscal risk. Brent crude futures rose back above $100 a barrel as traders monitored stalled US-Iran talks.
