Euro Attempts Recovery
The euro attempted to rebound from its weakest level in a year and a half, trading just below $1.12, as the oil price rally paused and the US dollar and Treasury yields retreated. However, the common currency remains under pressure from persistent energy-driven inflation, resilient economic activity and growing concerns over France’s public finances ahead of next year’s presidential election. France’s 2027 budget plan aims to reduce the fiscal deficit to 5% of GDP, but uncertainty is mounting over whether the government can secure parliamentary approval for substantial spending cuts amid a deeply divided legislature. On the monetary policy front, markets are pricing in another rate hike from both the European Central Bank and the US Federal Reserve in December. Investors are now turning their attention to Wednesday’s US CPI report and remarks from ECB policymakers during this week’s IMF—World Bank meetings for further clues on the outlook for interest rates.
12, as the oil price rally paused and the US dollar and Treasury yields retreated. However, the common currency remains under pressure from persistent energy-driven inflation, resilient economic activity and growing concerns over France’s public finances ahead of next year’s presidential election. France’s 2027 budget plan aims to reduce the fiscal deficit to 5% of GDP, but uncertainty is mounting over whether the government can secure parliamentary approval for substantial spending cuts amid a deeply divided legislature. On the monetary policy front, markets are pricing in another rate hike from both the European Central Bank and the US Federal Reserve in December.
Investors are now turning their attention to Wednesday’s US CPI report and remarks from ECB policymakers during this week’s IMF—World Bank meetings for further clues on the outlook for interest rates.