Euro steadies as French protests ease; pound and yen firm

LONDON, Oct 20 : The euro steadied on Tuesday as unrest in France eased overnight, though higher bond yields capped gains, and the pound rose after British jobs data showed signs of a recovery in the labour market.

The yen also jumped, snapping a two-day decline, after an auction of longer-dated Japanese bonds drew record demand, pushing the 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 bond yields higher and weighed on the euro since the start of September. The single currency was little changed on the day at $1.1211, 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 0.3 per cent against the dollar to $1.3347 after labour market data showed a resilient jobs market, the latest batch of data from the UK 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 US dollar index, which measures the currency against a basket of six peers, was down 0.1 per cent at 101.85, 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 $111 a barrel with few signs of progress in efforts to end the Iran 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 0.2 per cent higher to 158.14 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 US dollar strength dominates USD/JPY."

The yen was up 0.2 per cent against the euro on Tuesday but down a touch against the Swiss franc. 

Elsewhere, the Canadian dollar strengthened 0.5 per cent to 1.4048 against the greenback, nearing its strongest level in almost a month. Residents of Alberta 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, closing the domestic session at 6.6791 per dollar, its strongest close since June 2022.