In today's London market, EUR/USD is likely to focus on assessing how much of the US employment report's impact remains. Views have also emerged that pledges by French presidential candidates could weigh on the euro.
In today's London FX market, EUR/USD is expected to focus on assessing how much of the US employment report's impact remains, with attention turning to the possibility of a fresh year-to-date low. Views have also emerged that pledges by leading French presidential candidates could weigh on the euro. Sterling is drawing attention to survey results that offer clues on UK employment trends. Market caution is rising in this environment.
The US October employment report showed nonfarm payrolls exceeding expectations, while the unemployment rate also improved. The probability of a rate hike at the December FOMC meeting has risen, and the dollar could strengthen in tandem with higher US long-term yields. If expectations of accelerating inflation strengthen, EUR/USD could at times approach a fresh year-to-date low.
In the French presidential election, Mélenchon has put forward pledges including a higher minimum wage, reversing pension reform, higher taxes on high-income earners and a phased withdrawal from nuclear power, bringing fiscal expansion and friction with EU fiscal rules into focus. The French 10-year yield briefly fell below 4.80%, but could move higher again if fiscal concerns resurface.
The selection process for the next ECB president has also begun, with President Lagarde announcing her departure by February 2027. The candidates have been narrowed to former Dutch central bank governor Knot and former Spanish central bank governor de Cos, with a decision expected to be targeted for the leaders' summit in December. The short-term market impact is expected to be limited.