Euro Hovers Near 17-Month Low as Fiscal Concerns Weigh
The euro traded slightly above $1.12, hovering near its weakest level since May 2025, as concerns over France’s fiscal position weighed on sentiment. France is set to submit its 2027 budget today, while Marine Le Pen is expected to outline plans to cut government spending by €25 billion a year. Political uncertainty is also rising elsewhere, with Spain calling a snap election for November 29 and Italy heading for general elections next year. Meanwhile, bond-market turmoil has prompted investors to scale back expectations for further ECB rate hikes. Markets now price an 80% chance of another hike by year-end, compared with expectations for at least three additional moves by March 2027 previously. ECB Chief Economist Philip Lane said higher borrowing costs could curb demand and reduce the need for further tightening. In the US, weaker-than-expected inflation and jobs data strengthened expectations for the Fed to hold rates in October, with a December hike seen as more likely.
12, hovering near its weakest level since May 2025, as concerns over France’s fiscal position weighed on sentiment. France is set to submit its 2027 budget today, while Marine Le Pen is expected to outline plans to cut government spending by €25 billion a year. Political uncertainty is also rising elsewhere, with Spain calling a snap election for November 29 and Italy heading for general elections next year. Meanwhile, bond-market turmoil has prompted investors to scale back expectations for further ECB rate hikes.
Markets now price an 80% chance of another hike by year-end, compared with expectations for at least three additional moves by March 2027 previously. ECB Chief Economist Philip Lane said higher borrowing costs could curb demand and reduce the need for further tightening. In the US, weaker-than-expected inflation and jobs data strengthened expectations for the Fed to hold rates in October, with a December hike seen as more likely.