Dollar Gains Amid French Budget Woes, Stocks Rise: Markets Wrap

(Bloomberg) — The dollar pushed higher on Monday amid weakness in the euro and yen, as traders digested political tensions in France and a rebound in Treasury yields. 

The Bloomberg dollar index climbed as much as 0.5%, while the common currency and French bond futures slipped after far-right leader Marine Le Pen gave the strongest indication yet that she’s prepared to topple the government in Paris as soon as this week. Treasuries dipped as traders looked ahead to US data that may help shape Federal Reserve policy and digested hawkish comments from the Bank of Japan. 

The slew of global events gave the greenback further support, after the prospect of faster US inflation and trade tensions under Donald Trump had boosted the US currency in recent weeks. Traders were once again reminded of Trump’s focus on his America-first agenda after the US president-elect told BRICS nations not to create a currency to rival the greenback and repeated threats to levy a 100% tariff.    

Asian stocks rose, supported by signs of economic stabilization in China and a rally in tech shares. China’s 10-year yield dropped past the key psychological milestone of 2% and was at a record low, as traders ramped up wagers that authorities would ease monetary policy. 

The euro slid as much as 0.5% after French Finance Minister Antoine Armand said on Sunday the country won’t accept artificial budget deadlines from Marine Le Pen. The French far-right leader has told the prime minister he needs to make tweaks to his 2025 budget by Monday, which is when opposition lawmakers are expected to initiate the process to call the vote of no-confidence. 

“There’s certainly a political instability and the securities, the French government bonds, are pricing that instability,” Ecaterina Bigos of AXA Investment Management told Bloomberg TV. “Political instability creates uncertainty, but what is more important is what is France going to do to bring that deficit down?” 

Oil rose along with Asian equities on signs of a slow recovery in China’s economy, as traders look to Thursday’s OPEC+ meeting for further direction. Gold fell as the dollar strengthened. 

Key events this week: 

• Eurozone Eurozone Manufacturing PMI, unemployment, Monday
• UK S&P Global/CIPS UK Manufacturing PMI, Monday
• FT Global Banking Summit in London through Dec. 4, Tuesday;  BOE Governor Andrew Bailey will be a panelist
• China Caixin services PMI, Wednesday
• Eurozone S&P Global Eurozone Services PMI, PPI, Wednesday
• ECB President Christine Lagarde appears before European Parliament committees, Wednesday
• Fed Chair Jerome Powell speaks, Wednesday
• OECD publishes economic outlook, Wednesday
• Eurozone retail sales, Thursday
• Germany factory orders, Thursday
• OPEC and non-OPEC ministerial meeting, Thursday
• India rate decision, Friday
• Eurozone GDP, Friday
• US unemployment, nonfarm payrolls, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.2% as of 12:13 p.m. Tokyo time
• Nikkei 225 futures (OSE) rose 0.3%
• Japan’s Topix rose 0.7%
• Australia’s S&P/ASX 200 was little changed
• Hong Kong’s Hang Seng rose 0.3%
• The Shanghai Composite rose 0.8%
• Euro Stoxx 50 futures fell 0.6%

Currencies

• The Bloomberg Dollar Spot Index rose 0.4%
• The euro fell 0.5% to $1.0525
• The Japanese yen fell 0.6% to 150.60 per dollar
• The offshore yuan fell 0.3% to 7.2729 per dollar

Cryptocurrencies

• Bitcoin fell 0.3% to $97,535.21
• Ether rose 1.1% to $3,747.69

Bonds

• The yield on 10-year Treasuries advanced four basis points to 4.21%
• Japan’s 10-year yield advanced 2.5 basis points to 1.075%
• Australia’s 10-year yield declined one basis point to 4.33%

Commodities

• West Texas Intermediate crude rose 0.6% to $68.38 a barrel
• Spot gold fell 0.7% to $2,625.82 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Matthew Burgess.

©2024 Bloomberg L.P.