Euro Hits 17-Month Low as France Fiscal Worries Grow

The euro is under pressure as the new week begins, with investors focusing on France's fiscal challenges. The currency dropped 0.7%, hitting a 17-month low, as concerns grow over the country's debt levels and political uncertainty ahead of next year's presidential election. The widening gap between French and German bond yields is raising fears that financial stress in France could spread across European markets.

The dollar gained strength despite a weaker-than-expected U.S. jobs report, which has reduced expectations of a Federal Reserve rate hike this month. Investors now see less than a 20% chance of an October rate increase, though a December move remains possible. Meanwhile, European markets are poised for a strong start, and Asian stocks also showed gains, with the MSCI Asia-Pacific index up 1% and Japan's Nikkei rising 2.5%.

In Japan, the 30-year government bond yield reached a record high as Prime Minister Sanae Takaichi prepared to address the economy and financial markets. In Brazil, right-wing senator Flavio Bolsonaro's strong performance in the presidential vote has investors anticipating market reactions. Additionally, the International Monetary Fund announced a staff-level agreement with Sri Lanka, unlocking $345 million in financing.