The euro fell on Friday and was on track for a weekly loss against the dollar and the yen after a selloff in French government bonds. The yen headed for a weekly gain on safe-haven flows from Thursday's AI stock selloff. Traders now turn to next week's Fed, ECB and Bank of Japan meetings.
The euro fell on Friday and was on track for a weekly loss against both the US dollar and the yen. A selloff in French government bonds pushed the country's debt risk premium to its highest level since the euro zone sovereign debt crisis in 2011.
French unrest and a possible downgrade weigh on the euro
Concerns about growing unrest in France and the country's worsening budget problems hit the euro. France will deploy 70,000 police for protests on Saturday, Interior Minister Laurent Nuñez said. The country also faces the threat of a rating downgrade by Moody's on Friday.
Marc Chandler, chief market strategist at Bannockburn Global Forex, said the Moody's review poses a challenge. He added: "more activity is likely this weekend".
The euro was last down 0.21% at $1.1191, set to end the week 0.43% lower. Against the yen, it touched 175.08 yen, its lowest level since October 2025. It was on track for a weekly decline of 1.1% against the Japanese currency.
Yen gains on safe-haven flows
The Japanese yen was headed for a weekly increase against the greenback because it benefited from safe-haven flows from the selloff in AI stocks on Thursday. The yen weakened 0.1% to 156.9 per dollar, but was on track for a weekly gain of around 0.7%, its best week since mid-September.
Lee Hardman, senior currency analyst at MUFG, said the yen has continued to trade at stronger levels at the end of the week, encouraged by more risk-off trading conditions. Meanwhile, the dollar index rose 0.25% to 101.82 and was headed for a weekly gain of 0.03%.
Central bank meetings come into focus
Traders are looking to next week's policy meetings at the Federal Reserve, the European Central Bank and the Bank of Japan. All three are expected to leave rates unchanged, but investors will look for clues on the future path of policy.
Fed funds futures traders trimmed bets on a December hike after Thursday's stock market selloff, though they still see an 81% chance of such a move, according to LSEG data. Traders see a 66% chance of an ECB hike in December.
In Japan, annual core consumer inflation exceeded the central bank's 2% target in September for the first time in nine months. Traders are pricing in 61% odds of a BOJ hike in December.
Source: Investing.com (Reuters)
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