Euro rebounds as French bonds stabilize; bitcoin jumps past $100,000

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) -The euro rallied on Thursday as French government bonds steadied a day after the collapse of France’s government, even as bitcoin soared to a record past $100,000, with investors cheering the nomination of a pro-cryptocurrency head to run the U.S. Securities and Exchange Commission.

The spread between French and German 10-year yields narrowed on Thursday to 76.9 basis points, the tightest gap since Nov. 22. That has helped support the euro.

Despite Thursday’s gains, however, the euro was on track to post a loss this week, the fourth in the last five weeks.

French President Emmanuel Macron met allies and parliament leaders on Thursday as he sought to swiftly appoint a new prime minister to replace Michel Barnier, who officially resigned a day after opposition lawmakers voted to oust his government.

“The market is looking at the financial implications of the French government’s collapse. The takeaway seems to be that it’s not as impactful to the spending plans as initially thought, and that’s keeping the euro alive,” said Amo Sahota, executive director at FX consulting firm Klarity FX.

“We saw a lot of similarities when Greece is going through a lot of political instability and that could be a major drag on the euro zone. We got two large economies within the euro zone with struggling governments: France and Germany and analysts are concerned about the euro and they have already lowered their projections as a result.”

Germany was thrown into political disarray by the collapse of Chancellor Olaf Scholz’s coalition last month as well as disagreements over government spending.

The euro was last up 0.6% at $1.0567, further moving away from the two-year low of $1.0332 hit at the end of November as traders braced for a drawn-out reckoning for France.

In terms of technical factors, Shaun Osborne, chief FX strategist at Scotiabank in Toronto, said the positive short-term price action on Wednesday coupled with moderate gains through the low $1.05s on Thursday, have given “the euro a shot at extending a little higher to test key resistance and potential bull trigger at $1.0590.”

Traders are also all but certain the European Central Bank will cut interest rates next week and are pricing in around 157 basis points of easing by the end of 2025.

Meanwhile, bitcoin, the world’s best known cryptocurrency, has been on a tear since November on expectations that Donald Trump’s U.S. presidential election win will usher in a friendly regulatory environment for cryptocurrencies.

It rose to an all-time high of $103,649 in Asian hours, boosted in part by President-elect Trump’s nomination of pro-crypto Paul Atkins to run the SEC. It was last up 1.3% at $99,147, taking its year-to-date gains to more than 130%.

“With a better U.S. regulatory environment and next-generation stablecoins driving adoption in Europe, we believe bitcoin and the broader crypto market could continue to go from strength to strength,” wrote Arnoud Star Busmann, chief executive of Quantoz Payments, a Netherlands-based payments technology company.

In Asia, the Japanese yen rose as high as 149.66 per dollar but was last up 0.4% at 150.01 as traders pondered whether the Bank of Japan will hike interest rates later this month. Analysts said comments from typically dovish policymaker Toyoaki Nakamura that he’s not opposed to rate hikes helped push the currency higher.

Expectations had been growing that the BOJ will hike rates at its Dec. 18-19 meeting, bolstered by comments from Governor Kazuo Ueda, although media reports published on Wednesday suggested the BOJ may skip a rate hike this month.

The South Korean won dipped slightly as the nation’s finance ministry said the government would activate 40 trillion won ($28.35 billion) worth of market stabilization funds after the chaos that followed President Yoon Suk Yeol’s martial law declaration on Tuesday, which he rescinded hours later.

The won was last down 0.2% at 1,413 per U.S. dollar.

The dollar index, which measures the U.S. currency against six rivals, fell 0.6% to 105.74.

It extended losses after data showed initial claims for state unemployment benefits rose 9,000 to a seasonally adjusted 224,000 for the week ended Nov. 30. Economists polled by Reuters had forecast 215,000 claims for the latest week.

The spotlight will be on Friday’s U.S. nonfarm payrolls report for November, which is expected to show 200,000 jobs added in the month, according to a Reuters survey, after only 12,000 jobs were created in October, the lowest number since December 2020.

Bets on Fed rate cuts held broadly steady, however, partly influenced by Wednesday’s weaker-than-expected services sector data and the higher-than-expected jobless claims. Markets are pricing in about a 70% chance of a 25-bp rate cut later this month, and a 30% chance of a pause.

Currency              

Descripti RIC Last U.S. Pct YTD Pct High Low

Dollar 105.74 106.34 -0.54% 4.31% 106.37 105.

Euro/Doll 1.0583 1.0509 0.7% -4.13% $1.059 $1.0

Dollar/Ye 150.09 150.49 -0.29% 6.39% 150.76 149.

Euro/Yen 158.85​ 158.29 0.35% 2.07% 159.38 157.

Dollar/Sw 0.8786 0.8847 -0.68% 4.41% 0.8852 0.87

Sterling/ 1.2749 1.2702 0.38% 0.19% $1.2771 $1.2

Dollar/Ca 1.4026 1.4074 -0.33% 5.82% 1.4078 1.40

Aussie/Do 0.6449 0.643 0.31% -5.4% $0.6455 $0.6

Euro/Swis 0.9298 0.9292 0.06% 0.13% 0.9322 0.92

Euro/Ster 0.8298 0.8277 0.25% -4.27% 0.83 0.82

NZ 0.5883 0.5852 0.57% -6.87% $0.5886 0.58

Dollar/No 11.0336​ 11.0513 -0.16% 8.87% 11.0809 11.0

Euro/Norw 11.6831 11.6168 0.57% 4.09% 11.692 11.6

Dollar/Sw 10.8522 10.9227 -0.65% 7.8% 10.9454 10.8

Euro/Swed 11.4844 11.4815 0.03% 3.23% 11.5235 11.4

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Harry Robertson in London and Ankur Banerjee in Singapore; Editing by Shri Navaratnam, Tom Hogue, Sherry Jacob-Phillips, Susan Fenton, Frances Kerry, and Alexandra Hudson)