Euro hits 17-month low as France's debt worries weigh on Paris shares
The euro fell as much as 0.8% to $1.1160 on Monday 5 October, its lowest in 17 months, as concern over France's public finances and political gridlock pushed Paris stocks to six-month lows, Reuters reported. It later recovered to about $1.1202.
Worries about France’s fiscal position drove the euro to a 17-month low on Monday, 5 October, and weighed on French assets, Reuters reported.
Currency and bonds
The single currency fell by as much as 0.8% to $1.1160 before recovering to around $1.1202. It lost about 2.5% in September as investors worried about France’s rising debt and political gridlock ahead of next year’s presidential election. The premium for holding French 10-year bonds over German debt surged above 150 basis points on Friday; on Monday the French 10-year yield was broadly unchanged at about 4.86%, below Friday’s peak of 4.993%.
“France is the real deal in terms of risk premia for the euro,” Saxo strategist Neil Wilson told Reuters, noting that deficit-reduction plans still face parliamentary scrutiny and could be watered down.
Wider markets
Paris shares fell to six-month lows, while the pan-European STOXX 600 was up 0.5% by late morning. The dollar index rose 0.3% to 102.217, supported by the euro’s slide and high US yields, with the 10-year Treasury at about 5.28%. Madrid stocks rose 0.4% despite Prime Minister Pedro Sánchez calling an early election. Spot gold gained 0.4% to $4,160.3 an ounce and Brent crude traded near $102.6 a barrel.
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