Euro set for biggest weekly fall in months vs dollar as France fiscal trajectory weighs
FXE•The euro was on track for a 1.35% weekly fall against the dollar, its steepest decline since mid-May, amid concerns about France’s fiscal trajectory and the Federal Reserve’s hawkish shift.
1. Euro weakness deepens
The euro was set for a fourth consecutive weekly fall against the US dollar, down 1.35% for the week and on track for its biggest decline since mid-May. It was down 0.05% at $1.1240 on Friday after dropping 0.77% on Thursday.
2. French debt concerns
France’s fiscal and political outlook weighed on the currency. The yield gap between French and German 10-year bonds widened to more than 150 basis points on Friday, its highest level since the euro zone sovereign debt crisis in 2011; French 10-year yields had reached their highest level since 2002 on Thursday.
3. Policy and data focus
The dollar was set for a 1.01% weekly gain, its third consecutive rise, supported by the Fed’s hawkish shift in mid-September. Traders priced a 72% chance that the Fed would hold rates in October, up from 36% a week earlier, while investors awaited the US employment report.
