Euro slipped 0.68% to $1.1176 in Asian hours, its weakest since May 2025, dragging the MSCI Eurozone Index down 1.2% in the same session. The decline followed four consecutive weekly falls and echoes France's mounting debt concerns.
French bond futures dipped 0.22% as the 10‑year yield premium over Germany hit 140 basis points, its biggest weekly jump in 17 years. Analysts like Chris Weston of Pepperstone warn that the move may signal contagion, citing the steep bond rout that pushed global borrowing costs to multi‑decade highs.
European equities have mirrored the currency slide, with the MSCI Europe Index falling 0.9% versus the 0.5% average decline seen in the sector last week. German stocks showed relative resilience, rising 0.2%, while French shares lagged 1.5%, reflecting investor caution ahead of next year's election.
Looking ahead, traders anticipate the next French election cycle to weigh on markets, and bond market volatility could persist until a clear fiscal roadmap emerges. Meanwhile, the CME FedWatch indicates a 78% probability of the Fed holding rates steady in October, dampening expectations of immediate rate hikes.