The euro remains in demand despite Fitch downgrading France’s credit rating due to rising government debt, political polarization, and fiscal concerns. With the yield spread between French and German ten-year bonds widening, France’s new prime minister Lecornu scrapped a controversial plan to eliminate two public holidays, but emphasized the need for new budget cuts.
Ahead of the Federal Reserve’s Wednesday decision, some analysts now expect a 50 basis point rate cut, citing a weakening US labor market and the need for a policy recalibration. President Trump also endorsed a significant rate cut, while Treasury Secretary Bessant reported progress in US-China trade talks despite China’s aggressive demands.
Today’s key US data includes the Empire manufacturing survey, with speeches also expected from ECB officials including Schnabel, Köker, and Lagarde.
Exclusive FX research from LMAX Group Market Strategist, Joel Kruger
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