Political upheaval is the flavour of the week, with fiscal strain providing a bitter aftertaste. France sees yet another prime minister resign and the euro falls, while Washington’s budget deadlock continues to weigh on the dollar. The Yen also reacted to news of a new leader in Japan. Volatility is very much here to stay.
Read on to find out more.
Current rates
| Currency pair | Rate |
|---|---|
| eur usd | 1.1664 |
| gbp eur | 1.1509 |
| gbp usd | 1.3427 |
Rates correct as of 10:25am on Monday 6 October but may now have changed.
The Big 3
Three stories covering the latest developments in economies, currencies and borders.
Euro slides as France faces fresh political turmoil
The euro fell to it’s weakest position in weeks, after another bout of political instability in France, with Prime Minister Sébastien Lecornu resigning, just a day after President Macron announced a new cabinet. The move, which also comes less than a month after the resignation of his predecessor, deepens uncertainty over France’s fiscal outlook, following a string of short-lived governments unable to pass deficit-cutting budgets through a divided parliament. The euro dropped 0.8% against the dollar to $1.1652, while French equities and bonds also tumbled. The pound in turn, is on course for its best day against the euro in more than two months.
Continuing US shutdown weighing on the dollar
The dollar remains under pressure as the US government shutdown continues, eroding confidence in Washington’s fiscal management. With 750,000 federal workers furloughed and key data releases delayed, markets are bracing for a broader economic hit. The greenback has come under renewed scrutiny following recent Fed cuts and criticism from the White House, fuelling demand for alternative assets. Gold has surged for a seventh straight week, while other precious metals have followed suit as investors seek safety.
[Reuters]
Yen weakens as Japan’s Takaichi set to take power
The yen fell more than 1.5% against the dollar after pro-stimulus lawmaker Sanae Takaichi was confirmed as Japan’s next prime minister. Her expected push for fiscal support and opposition to early rate hikes by the Bank of Japan have weighed heavily on the currency, driving it toward ¥150 per dollar. The Nikkei 225 hit a fresh record high amid positivity around fresh stimulus, while gold and Bitcoin climbed to new peaks in yen terms. Markets now see Japan diverging from tightening paths elsewhere, adding to volatility in global FX.
[FXStreet]
Looking forward
- Monday: US Supreme Court new term begins.
- Tuesday: Australia reports Consumer Confidence Change.
- Wednesday: FOMC publishes minutes.
- Thursday: Brazil and Mexico report CPI. ECB publishes minutes.
- Friday: Michigan consumer sentiment index. Canada unemployment data.
Here’s what we’re talking to our clients about
We’re always here to support. Here are some of the conversations we’re having:
- US interest rate outlook
- EUR prospects under varying leaders
- Year end planning/forecasting and the role of FX
The contents of this article do not constitute financial advice and are provided for general information purposes only.