Published Sun, Oct 25, 2026 · 06:45 PM
THE euro fell on Friday (Oct 23) and was on track for a weekly loss against both the US dollar and the yen, as a sell-off in French government bonds pushed the country’s debt risk premium to its highest level since the eurozone sovereign debt crisis in 2011.
The Japanese yen was headed for a weekly increase against the greenback as it benefited from safe-haven flows from the sell-off in artificial intelligence stocks on Thursday. The US dollar index was little changed on the week.
The euro was hit by concerns about growing unrest in France and the country’s worsening Budget problems. France on Saturday deployed 70,000 police backed by specialist units for further protests over underfunded schools and living costs, Interior Minister Laurent Nunez said.
The country also faced the threat of a rating downgrade by Moody’s on Friday, but was ultimately spared.
The euro was last down 0.21 per cent at US$1.1191, set to end the week 0.43 per cent lower. It fell more sharply against the yen, touching its lowest level since October 2025 at 175.08 yen. It was last down 0.11 per cent against the Japanese currency and on track for a weekly decline of 1.1 per cent.
The US dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.25 per cent to 101.82 and was headed for a weekly gain of 0.03 per cent.
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The yen weakened 0.1 per cent to 156.9 per US dollar and was on track for a weekly gain of around 0.7 per cent, its best week since mid-September.
The yen continued to trade at stronger levels at the end of last week, “encouraged by more risk-off trading conditions”, noted Lee Hardman, senior currency analyst at MUFG.
Traders are looking to next week’s policy meetings at the US Federal Reserve, the European Central Bank (ECB) and the Bank of Japan (BOJ). All three are expected to leave rates unchanged, but investors will look for clues on the future path of policy.
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Fed funds futures traders trimmed bets on a December hike after Thursday’s stock market sell-off, though they still see an 81 per cent chance of such a move, based on LSEG data.
Traders see a 66 per cent chance of an ECB hike in December. Investors will scrutinise any hint of the rate outlook after ECB president Christine Lagarde said in late September that a moderate policy response to inflation was appropriate.
Purchasing Managers’ Index (PMI) data showed private-sector growth in the eurozone slowed in October to its weakest pace in four months, hurt by a renewed contraction in France.
“The drop brings the PMIs back in line with other growth indicators, in our view, rather than suggesting downside risks from here,” Giada Giani, an economist at Citi, said. “France remains a drag, but the rest of the euro area remains resilient.”
In Japan, data on Friday showed annual core consumer inflation exceeded the central bank’s 2 per cent target in September for the first time in nine months.
The reading points to broadening price pressures and strengthens the case for a near-term rate hike, analysts said. Traders are pricing in 61 per cent odds of a BOJ hike in December. REUTERS