Euro dips further as French central bank chief warns the country risks being ‘strangled by interest rates’ – business live

The euro has continued its decline, falling further amid French debt concerns and political instability across Europe. As of the latest figures, the currency is trading near a 17-month low against the US dollar, slipping 0.13% to $1.1206.

France's situation is not comparable to Greece during the eurozone crisis. The country's proposed budget, aimed at reducing spending and narrowing the deficit, could potentially ease market concerns. However, without decisive action, there exists a risk of escalating interest rates, effectively "strangling" the economy.

French bond spreads have shown significant tightening in recent days, narrowing from a peak of over 150 basis points to 136 basis points in the present session. While the markets do not believe France is currently in a sovereign crisis, they express concern that spreads exceeding 150 basis points could open up contagion risks beyond France and extend to European periphery states.

Experts have repeatedly emphasized that concerns over France's deficit should be a greater risk factor for investors than near-term inflation. The market seems to be targeting the weakest links in the fiscal deficit landscape, namely France and the United Kingdom.

Key economic indicators are expected to be released in the coming hours. At 8:30am BST, the Eurozone S&P Global Construction survey for September will be published. At 9:30am BST, the UK S&P Global Construction PMI for September will be released. At 10am BST, data on Eurozone retail sales for August will be available. At 11am BST, the UK Chancellor will meet with bank bosses. Finally, at 1:15pm BST, US ADP employment change for the previous month will be disclosed, followed by US trade figures for August at 1:30pm BST.