Dollar holds firm as French fiscal woes keep euro on back foot
SPY•The dollar hovered near a 17-month high as French debt and political gridlock concerns weighed on the euro, while soft U.S. jobs data reduced expectations for a Federal Reserve rate hike this month. Traders priced a 78% chance of rates holding steady in October, up from 36% a week earlier.
1. Dollar and euro
The dollar started the week firm, with its index at 101.97. The euro traded at $1.1246, near its lowest level since May 2025, after four consecutive weekly declines as France’s debt and political gridlock concerns weighed on the currency.
2. Yields and safe havens
The dollar was supported by higher Treasury yields and safe-haven demand following a global bond selloff. The U.S. 10-year Treasury yield stood at 5.262%, below last week’s 24-year high.
3. Fed rate expectations
Soft U.S. job growth in September reduced expectations for a rate hike this month. Traders priced a 78% chance of the Fed holding rates steady in October, compared with 36% a week earlier, though they still expected a hike in December and two more in the first half of 2027. Analysts said the market may be pricing in more hikes than central banks will deliver.
