Euro set for weekly drop against dollar, yen as France concerns resurface
TLT•The euro was on track for weekly losses of 0.42% against the dollar and 1.18% against the yen after a sell-off in French government bonds pushed the country’s debt risk premium to its highest level since the 2011 euro area sovereign crisis. The dollar also faced pressure as concerns about the sustainability of AI investment weighed on sentiment.
1. Euro weakens on France concerns
The euro fell against the dollar and yen as renewed selling in French government bonds pushed the country’s debt risk premium to levels not seen since the euro area sovereign crisis in 2011. It was last down 0.15% at $1.1198 and on track for a 0.42% weekly decline; against the yen, it fell 0.24% to 175.42, set for a 1.18% weekly drop.
2. Markets await central banks
The yen rose as investors sought safety amid fragile equity markets and concerns about France’s fiscal outlook. The dollar was also pressured by doubts about the sustainability of the AI investment boom, which fuelled expectations of a more dovish Federal Reserve. The European Central Bank is expected to hold rates next week, while investors will also watch for policy decisions from the Federal Reserve and Bank of Japan.
3. Economic data adds context
Euro zone private-sector growth slowed to its weakest pace in four months in October, hurt by renewed contraction in France. Japan’s annual core inflation exceeded the Bank of Japan’s 2% target in September for the first time in nine months. The US 10-year Treasury yield was reported at 4.99% on Friday after falling 19.5 basis points the previous day.
