Dollar Index hits an 18-month high on French debt fears
France's government owes close to 120% of what its economy produces in a year. The gap between what France and Germany pay to borrow for 10 years reached about 1.5 percentage points on Friday, the widest since 2011.
The Dollar Index hit an 18-month high due to concerns over France's government debt, which is nearly 120% of its annual economic output. The widening gap between France and Germany's borrowing costs for 10-year bonds reached 1.5 percentage points, the highest since 2011. The Euro accounts for 57.6% of the Dollar Index, and its decline to the lowest since May 2025 contributed to a significant portion of the index's rise.
The ISM services index came in below expectations, with the Euro's rise above 1.1200 playing a larger role than falling US yields. The index experienced two brief surges, reaching above 102.50 before giving back half of its gains in subsequent drops. The US Dollar remains the world's most heavily traded currency, with over 88% of global foreign exchange turnover.
The Federal Reserve's monetary policy, particularly interest rate adjustments, significantly impacts the USD's value.
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