While market concerns over France's debt problems are seen as excessive, the euro rose briefly as the dollar weakened following the US midterm elections. The article also discusses France's fiscal management and the outlook for next year's presidential election.
The euro rose briefly to around 1.1270 against the dollar as the currency market reacted to a weaker dollar after the Democrats scored a decisive victory in the US midterm elections, but was pressured by profit-taking amid a sharp drop in crude oil prices and lower US Treasury yields, struggling to rise beyond the lower 1.12s. EUR/JPY rose briefly to ¥178.45 before falling to the ¥177 range.
Moulin, head of France's fiscal administration, indicated that market concerns over the country's debt problems were excessive and said the budget was likely to be enacted broadly as planned. While pointing out that the sharp rise in yields since September was mainly due to political uncertainty, Moulin indicated that the 2027 budget could be enacted even without parliamentary approval.
It was stressed that all candidates in next year's presidential election should work on the fundamentals of reducing the fiscal deficit, whoever they may be. This means that concerns over France's fiscal position will persist, but the view was expressed that excessive market reactions should be kept in mind.
The article lists the market levels for EUR/USD, EUR/JPY and EUR/GBP, conveying current foreign-exchange trends and issues surrounding France's fiscal position at the same time.