Euro sinks to 17-month low on France debt fears
SPY•The euro fell as much as 0.8% to $1.116, its weakest since May 2025, amid concerns about France’s budget deficit and a bond selloff. US services prices paid rose to 74.0 in September from 72.6 in August, while the dollar index climbed to its highest level since April 2025.
1. Euro pressured by France
The euro fell to a 17-month low against the dollar on Monday as concerns about France’s ability to rein in its budget deficit and a sharp bond market selloff raised fears of a possible euro zone debt crisis. It was down 0.37% at $1.1211 after reaching $1.116, its weakest since May 2025.
2. French bond spread widens
The yield gap between French bonds and German Bunds widened to nearly 160 basis points on Friday, its largest since the euro zone sovereign debt crisis in 2011, before narrowing to around 137 basis points. Investors favored German debt over more indebted countries as inflation and fiscal concerns weighed on markets.
3. Dollar and yen moves
The dollar index rose 0.26% to 102.16 after reaching its highest level since April 10, 2025. The US services PMI slipped to 54.9 in September from 55.4 in August, while its prices-paid measure rose to 74.0 from 72.6. Japan’s Prime Minister Sanae Takaichi pledged to “control” bond issuance and act swiftly against market turbulence.
