Investors focus on 'dire fiscal picture' in France
The slow-moving global sell off in long term sovereign bonds is also affecting the Eurozone, although the effect there is very country-dependent. Investors are focused on France, which combines a dire fiscal picture with political instability.
The French PM Bayrou will face a confidence vote next Monday as efforts to cut public spending have so far proved fruitless. 30-year rates in Germany also hit 15-year highs last week. While the euro continues to benefit from worries about institutional degradation in the US, it is being held back by continued sluggish growth and the low short-term rates that go with it.
This week's key release is the flash inflation report for August, which should show continued convergence towards the ECB targets - a rarity among major economic areas.
Author
Matthew Ryan, CFA
Ebury
Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.
