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Monday, 5 October 2026dailybeirut.com
Economy
The euro hit a 17-month low as concerns over France's fiscal sustainability triggered bond sell-offs, while the US dollar surged on safe-haven flows and rising Treasury yields.
The exchange rate of the single European currency reached a new bottom on Monday, falling to its lowest point in the past seventeen months. This decline resulted from pressures stemming from growing concerns about the sustainability of public finances in France, coinciding with a broad wave of selling in bond markets. In contrast, the dollar received strong support driven by rising US Treasury yields and safe-haven inflows.
During the Asian session, the euro fell to $1.1161, representing the currency's lowest reading since May 2025. This drop reflects the continuation of losses for four consecutive weeks amid investor uncertainty regarding the size of French sovereign debt and political stagnation ahead of the April 2027 elections. Later in trading, the European currency declined by 0.67% to settle at $1.1178, losing 0.4% against the Swiss franc and 0.34% against the British pound.
Brent Donnelly, Head of FX Trading at Spectra Markets, explained that markets began pricing in risks associated with the French political landscape early as the 2027 election approaches. Donnelly noted weak investor confidence in any new budget commitments, especially given potential changes in the ruling power. The repercussions of last week's bond market sell-off continue, driven by concerns over debt levels, rising oil prices, and inflationary pressures.
On the debt instruments front, futures contracts for French bonds fell by 0.13%. On the American side, the yield on ten-year US Treasury notes recorded 5.262%, after touching its highest level in 24 years last week. In the foreign exchange market, the British pound dropped by 0.24% to register $1.32064, while the Japanese yen reached 157.92 against the dollar. Conversely, the general Dollar Index rose by 0.47% to reach 102.37 points.
Matthew Ryan, Head of Market Research at Ebury, confirmed that the dollar benefits primarily from rising US Treasury yields, in addition to safe-haven flows resulting from the global debt sell-off wave. These gains for the dollar come despite a retreat in expectations for near-term US interest rate hikes, following data showing US job growth slowed more than expected during September.
