Euro edges up as oil eases, traders brace for a week of central bank decisions

what happened

The euro gained modestly on Monday against the dollar and the yen, Reuters reports, as crude prices dipped and Moody's left France's credit rating unchanged on Friday. Investors stayed on the sidelines ahead of a packed week of monetary policy meetings.

Brent futures fell after Reuters reported that Qatari mediators had travelled to Tehran to help ease regional tensions, working in coordination with the US. Oil had hit a six-month high last week. Earlier, French government bonds sold off, pushing the country's risk premium to its highest level since the 2011 turmoil. OAT prices recovered on Monday. The euro traded at $1.1228 and 176.15 yen, while the dollar index held near 101.80. Barclays strategists think French stress is unlikely to fade before the April-May presidential election.

The Fed, ECB and Bank of Japan are expected to hold rates steady despite inflation pressure, while keeping the option of a December hike open. New Zealand and Canada are seen raising rates. The yen slipped 0.20% to 157.18 per dollar. Brazil's real was expected to drop sharply after President Luiz Inacio Lula da Silva won a fourth term, though opponent Flavio Bolsonaro said he would seek to annul the result.

why it matters

For markets, this week's policy decisions and the French debt spread matter most, since they shape expectations for ECB policy. According to ING, Brazil's 7-8% budget deficit and roughly 70% net debt-to-GDP leave its currency exposed to a global bond selloff.

market impact

EUR/USD, USD/JPY: oil and central bank decisions set currency direction; BRL under pressure on fiscal risks

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