Euro drops toward 17-month lows, dollar holds gains after Fed minutes
TLT•The euro fell 0.53% to $1.1198, nearing Monday’s 17-month low, while the dollar index rose 0.32% to 102.24 after Fed minutes showed policymakers divided over the reasoning for a rate hike. The market-implied chance of an October hike fell to 19.4% from about 38% a week earlier.
1. Euro weakens, dollar gains
The euro fell as French bonds came under renewed pressure over fiscal concerns, while the dollar held gains after minutes from the latest Federal Reserve meeting. The euro dropped 0.53% to $1.1198, nearing the 17-month low reached Monday; the dollar index rose 0.32% to 102.24.
2. Fed hike odds decline
The minutes showed policymakers were divided over the rationale for raising interest rates. The chance of a hike of at least 25 basis points at the Fed’s October meeting stood at 19.4%, down from about 38% a week earlier, while markets priced in an 83% chance of a hike in December.
3. French yields rise
The French 10-year yield rose 11.9 basis points to 4.8696%, while the German 10-year yield was unchanged at 3.4805%. French debt faced pressure as politicians struggled to curb the budget deficit ahead of the 2027 election; Bank of France head Emmanuel Moulin said France did not at this point need help from the European Central Bank.
