NEW YORK: The euro was headed for a fifth straight weekly drop on Friday, with early gains fading as oil prices recovered from earlier lows, but recent selling pressure eased as France’s beleaguered bond market steadied.
The euro zone’s currency hit a 17-month low of USD1.1161 on Monday as investors worried about France’s record public debt and the difficult political path to budget cuts, in contrast with a robust-looking US economy and currency.
The dollar index, which measures the greenback against a basket of currencies, rose 0.18 percent to 102.30. The index was up about 0.3 percent on the week and on track for a fourth straight weekly gain, its longest run since May 2025.
The euro was last down 0.15 percent at USD1.1192, and off about 0.5 percent on the week as it was poised for its longest streak of weekly declines against the dollar since the start of 2025.
Risk premiums on French and Italian government debt were on track for a weekly decline after jumping in late September, as investors looked for fresh developments before demanding higher compensation for fiscal and political risks.
Global bond markets were calmer on Friday as oil prices fell after US President Donald Trump said that the US would not attack Iran before US midterm elections on November 3 and added that there had been productive talks with Tehran over the war.
“As it stands right now, you have a confluence of factors — you have higher oil prices, you have the issue in France, so it is really tough to say what is moving the market more than the other,” said Eugene Epstein, head of trading and structured products at Moneycorp in Stamford, Connecticut.
“But practically speaking, I’d say today is in a relative holding pattern, everyone is just waiting for all the Fed speak to make its way through, because certainly you can see that the sensitivity of the dollar is high to the entire range of Fed speakers now,” Epstein said.
Crude prices moved off their lows, however, as British navy-affiliated agency UKMTO said a vessel was struck by an unknown projectile 13 nautical miles west of Al Jazeera in the United Arab Emirates.
US crude fell 0.13 percent to USD91.37 a barrel after falling as low as USD90.01 and Brent slipped to USD104.10 per barrel, down 0.15 percent on the day, after declining to USD102.33.
Bond yields around the world have climbed in recent weeks due to expectations of central bank rate hikes as well as concerns about government finances.
But expectations for a rate hike from the Fed at its policy meeting later this month remain subdued, with markets pricing in a 19.4 percent chance for a rate hike of at least 25 basis points, according to CME FedWatch. However, investors are pricing in an 85.8 percent chance for a hike at the central bank’s December meeting.
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