Euro Slumps to 17-Month Low on French Debt Fears

The euro sank to a 17-month low against the dollar as Asian markets opened higher on Monday. Investors scaled back expectations for a Federal Reserve rate hike in October following weaker-than-expected U.S. job growth and revised data showing job losses in prior months.

The euro dropped over 0.8% to $1.1161 before rebounding slightly to $1.1178. The currency had already lost about 2.5% in September. Concerns about France's high public debt and political instability ahead of next year's presidential election fueled the decline. The yield spread between 10-year French and German bonds widened beyond 150 basis points.

“We are starting to see cracks in the general sentiment towards the euro,” said Bart Wakabayashi, head of the State Street division in Tokyo. He noted that institutional investors are aggressively selling the euro against the dollar. Meanwhile, the dollar index climbed 0.5% to 102.39, while the British pound and Japanese yen also weakened.

The probability of a Fed rate hike in October fell below 20%, down from 64% a week earlier, according to CME FedWatch data. However, traders still anticipate a possible increase in December. Asian stocks advanced, with Japan's Nikkei rising 2% and the MSCI Asia Pacific Index gaining 0.9%. U.S. and European futures saw modest movements.

Oil prices declined as increased Middle Eastern exports and G7 strategic reserves offset supply concerns. Brent crude fell 0.5% to $101.75 a barrel, while U.S. light crude dropped 0.9% to $90.29. Gold also dipped 0.24% to $4,132.33 per troy ounce.