Euro Weakens as French Political Unrest Escalates

Political instability in France continues to drag down the euro, as unrest escalates ahead of the Presidential election. The French government blames far-left activists for the protests, which have intensified over the weekend. The ongoing budget challenges and political backdrop are fueling concerns about the country's stability, further weakening the euro.

The pound has gained ground against the euro, with the GBP/EUR exchange rate moving above €1.18. However, this appears more due to euro weakness than renewed confidence in the pound. The coming week will see several Bank of England speakers, including the Governor and Chief Economist, who may provide hints on future interest rate policies.

In the UK, speculation suggests the government may impose tariffs on Chinese electric vehicle manufacturers, aligning with the EU's stance. This could support the domestic automotive sector, which is facing production declines. Meanwhile, Middle East tensions have shifted focus to Yemen, where the Houthis are attempting to gain control amid Saudi-backed defenses.

In the US, the Federal Reserve's recent payrolls report weakened the case for another interest rate hike. This week, markets will focus on the Fed minutes and speeches from officials, which could offer insights into the policy debate. The US mid-term elections are also gaining momentum, potentially influencing market sentiment.

Mexico and Canada will release key economic data this week. Mexico's inflation figures and vehicle production data could impact Banxico's interest rate decisions, while Canada's labor market report may affect the Canadian dollar's performance against the USD.