NEW YORK: The euro rose on Wednesday in choppy trading, as a French no-confidence vote due later in the session seemed to have already been priced in the currency, while the US dollar slipped as December interest rate cut chances firmed amid signs the American economy was slowing.
The South Korean won, one of the biggest movers on Tuesday, rose against the dollar, bolstered by suspected central bank intervention and the finance ministry’s pledge of “unlimited” liquidity support to markets. That came a day after South Korean President Yoon Suk Yeol declared martial law in a late-night television address, only to lift it hours later.
The euro climbed 0.1% against the dollar to $1.0522 ahead of a vote by French lawmakers on no-confidence motions which are all but certain to topple the fragile coalition of Prime Minister Michel Barnier.
The debate began at 4 p.m. in Paris (1500 GMT), with voting expected about three hours later, parliament officials said.
“The French vote has been partially priced in the euro because yesterday the headlines suggested that the outcome of the vote may be negative,” said Vassili Serebriakov, FX strategist at UBS in New York.
“We think the impact of French political risks would be negative ... because the European economy today is much weaker. Europe is also facing challenges like tariff threats in the US It’s also potentially more damaging for the euro because it comes at a time broader appetite for European assets is waning.”
Three sources told Reuters that French President Emmanuel Macron aims to install a new prime minister quickly if his government falls on Wednesday.
Barnier’s removal would deepen the political crisis in the euro zone’s second-largest economy, and could further weigh on the euro, which has fallen sharply since Donald Trump’s victory in November’s US presidential election.
Investors also digested comments from European Central Bank President Christine Lagarde in a parliamentary hearing on Wednesday. She said the ECB will continue to lower rates, but did not commit to any pace of easing.
The ECB will next meet on Dec. 12, and economists overwhelmingly expect another 25 basis point rate cut, the fourth such move this year.
In the United States, the dollar index inched lower to 106.25, down 0.1%. Wednesday’s economic data did not shake expectations of an interest rate cut later this month.
US private payrolls increased at a moderate pace in November, although it came below expectations, while annual wages for workers staying in their jobs edged up for the first time in 25 months.
Private payrolls rose by 146,000 jobs last month after advancing by a downwardly revised 184,000 in October, the ADP report showed. Economists polled by Reuters had forecast private employment increasing by 150,000 positions after a previously reported 233,000 jump in October.
Comments
Comments are closed.