Dollar and euro drift as yen weakens amid political risk in Europe
Reuters reports the dollar and euro traded with little direction in early Asian trade, while the French-German bond spread widened to 147.3 basis points.
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what happened
The dollar moved without clear direction in early Asian trading on Tuesday. A modest recovery in investor confidence supported higher-yielding currencies, but rising political tension in Europe kept traders on edge. The euro was steady at $1.1216, while sterling rose 0.1% to $1.3308.
The Australian dollar gained 0.1% to $0.6986 and the New Zealand dollar edged up to $0.5668. Against the yen, the greenback was flat at 158.56 ahead of an auction of 20-year Japanese government bonds. The dollar index, which tracks the currency against six peers, rose 0.2% to 101.98 after two days of losses.
In France, authorities imposed curfews in several cities on Monday after nationwide anti-government protests, and Italy will send 500 troops after two days of unrest. The spread between French and German 10-year bonds widened 9.9 basis points to 147.3. According to Reuters, the US 10-year Treasury yield was unchanged at 5.131%.
why it matters
Markets are watching French budget talks, as Parliament is set to hold a first formal vote on the revenue section of the 2027 finance bill. The OAT-Bund spread shows how investors price French borrowing costs. The euro's steadiness suggests traders do not yet see this as a systemic problem for the eurozone.
market impact
EUR/USD and French bonds: political risk weighs on the euro and widens the OAT-Bund spread
tags
instruments
sources
- Dollar and euro drift, yen slips as markets seek direction — Reuters, 20 October 2026 at 01:11 UTC
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