Dollar holds firm as French fiscal woes keep euro on the back foot
TLT•The dollar index stood at 101.97, near a 17-month high, as French fiscal worries weighed on the euro and soft U.S. jobs data tempered expectations for a Federal Reserve rate hike this month. The euro traded at $1.1246, near its lowest level since May 2025.
1. Dollar supported by yields
The dollar began the week firm, supported by higher U.S. Treasury yields and safe-haven flows as global bond markets sold off. The U.S. 10-year Treasury yield was 5.262%, below the 24-year high it reached last week.
2. Euro under pressure
The euro traded at $1.1246 after four consecutive weekly declines, as concerns about France's debt and political gridlock ahead of next year's election weighed on the currency. Sterling traded at $1.3241, while the yen stood at 157.69 per dollar.
3. Rate expectations shift
After U.S. job growth slowed more than expected in September, traders priced in a 78% chance that the Federal Reserve would hold rates steady in October, up from 36% a week earlier. Traders still expected a December hike and two more in the first half of 2027, though analysts said the market's rate-hike pricing may be too aggressive.
