LONDON — The euro rebounded slightly on Tuesday as unrest in France eased overnight, while the pound rose after British jobs data showed signs of a recovery in the labour market.
The yen also jumped, snapping a two-day drop, after an auction of longer-dated Japanese bonds drew record demand, pushing the U.S. dollar lower after it rose the day before.
In France, authorities set curfews in several cities on Monday to curb nationwide anti-government protests which have plunged President Emmanuel Macron’s final months in office into turmoil.
France will remain in the spotlight on Tuesday as the lower house is set to vote on the revenue section of the proposed 2027 budget.
Concerns about France’s long-term finances have pushed its bonds lower and weighed on the euro since the start of September. The single currency was last up 0.2 per cent on the day at US$1.1231, after hitting its lowest since May 2025 last week at $1.1113.
“The worries in France are not going away anytime soon,” said Tommy von Brömsen, FX strategist at Handelsbanken.
“The bearish view on France will stay for a while longer and there’s much more euro weakness to be priced in.”
Britain’s pound rose 0.4 per cent against the dollar to $1.3350 after labour market data showed a resilient jobs market, the latest batch of data from the U.K. that surprised to the upside.
“The risk is that a resilient labour market gives the Bank of England both the room and the reason to raise interest rates again,” said Lale Akoner, global market strategist at eToro.
“Sterling could benefit from rising rate expectations.”
The U.S. dollar index, which measures the currency against a basket of six peers, was down 0.2 per cent at 101.75, near the lower end of October’s trading range, as pressure eased on the euro.
Investors were still watching oil prices, with Brent crude futures near a five-month high above $110 per barrel on little signs of progress in efforts to end the Middle East war. A further increase in oil prices would be “dollar supportive,” according to Handelsbanken’s von Brömsen.
Strong Japanese bond auction
An auction of 20-year Japanese government bonds received bids worth 5.84 times the amount sold, the highest ratio since the bonds were first sold in 1987. That propelled the yen 0.3 per cent higher to 158.1 per dollar.
“The record 20-year auction is a strong signal that sidelined cash is finally coming back,” said Masahiko Loo, senior fixed-income strategist at State Street Investment Management in Tokyo.
“JGBs are also starting to look like a relative haven from Europe’s political and fiscal volatility, particularly around France,” he added.
The yen’s value has been relatively resilient against other currencies including the euro and Swiss franc, Loo said, indicating “higher domestic yields and returning institutional demand are becoming a structural support for Japanese assets, even when U.S. dollar strength dominates USD/JPY.”
The Australian dollar was up 0.2 per cent at $0.6996 while its New Zealand counterpart gained 0.5 per cent to $0.5689.
Elsewhere, the Canadian dollar strengthened 0.4 per cent to 1.40761 against the greenback, nearing its strongest level of the past month. The currency was little changed after Alberta residents chose to remain part of Canada in the province’s first-ever vote on whether to start the process towards holding a binding referendum on separation.
The Chinese yuan strengthened 0.1 per cent against the dollar to 6.6778 in offshore trade after the People’s Bank of China kept interest rates on hold, in line with market expectations.
(Reporting by Samuel Indyk and Gregor Stuart Hunter; Editing by Edwina Gibbs and Jacqueline Wong)
