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FOREX: French Politics Undermines EUR, USD Stronger as Trump Targets BRICS

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  • Focus for the session ahead remains on French politics, with PM Barnier holding discussions with ministers from his minority government today, ahead of a possible censure motion brought by the far-right RN party which, if held, would be primed for Wednesday/Thursday, and could theoretically lead to a collapse of the current governing regime.
  • EUR has traded weaker as a result, with the pair showing below $1.0500 at the European open, putting EUR/USD within range of next support at 1.0474, the Nov27 low - but it's EUR/JPY that's seeing more notable price action here, as the cross breaks to multi-month lows as 158.11 support gives way. The morning's price action shows markets remain sensitive to headline risk and French politics could be the dominant theme outside of US data this week.
  • The greenback is firmer against all others in G10, with the dollar benefiting from the downleg in equities from the open as well as Trump's warnings over the weekend that a unified BRICS currency positioned to replace the dollar would result in member states facing 100% tariffs for goods headed to the US, and Trump requires a "commitment" from the countries as an assurance. The USD Index bounce has topped both the Friday and Thursday highs to make 106.924 the next level above. The formation of a golden cross late last week also defines the near-term momentum, the first since March this year.  
  • US data set for release Monday includes the final manufacturing PMI for November and the Manufacturing ISM, at which markets expected an uptick to 47.6 from 46.5 and a more notable uptick in prices paid, to 56.0 from 54.8 previously. The data will be watched carefully for any indications ahead of Friday's Payrolls release - at which markets expect 200k jobs added, and an unchanged unemployment rate at 4.1%.
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  • Focus for the session ahead remains on French politics, with PM Barnier holding discussions with ministers from his minority government today, ahead of a possible censure motion brought by the far-right RN party which, if held, would be primed for Wednesday/Thursday, and could theoretically lead to a collapse of the current governing regime.
  • EUR has traded weaker as a result, with the pair showing below $1.0500 at the European open, putting EUR/USD within range of next support at 1.0474, the Nov27 low - but it's EUR/JPY that's seeing more notable price action here, as the cross breaks to multi-month lows as 158.11 support gives way. The morning's price action shows markets remain sensitive to headline risk and French politics could be the dominant theme outside of US data this week.
  • The greenback is firmer against all others in G10, with the dollar benefiting from the downleg in equities from the open as well as Trump's warnings over the weekend that a unified BRICS currency positioned to replace the dollar would result in member states facing 100% tariffs for goods headed to the US, and Trump requires a "commitment" from the countries as an assurance. The USD Index bounce has topped both the Friday and Thursday highs to make 106.924 the next level above. The formation of a golden cross late last week also defines the near-term momentum, the first since March this year.  
  • US data set for release Monday includes the final manufacturing PMI for November and the Manufacturing ISM, at which markets expected an uptick to 47.6 from 46.5 and a more notable uptick in prices paid, to 56.0 from 54.8 previously. The data will be watched carefully for any indications ahead of Friday's Payrolls release - at which markets expect 200k jobs added, and an unchanged unemployment rate at 4.1%.