The euro strengthened on Thursday despite the French government's turmoil, a development that had been expected, while Bitcoin made history by surpassing $100,000 for the first time, while the yen also strengthened ahead of the Bank of Japan's decision on December 19.
Bitcoin hit an all-time high of $103,619 in Asian trading, boosted by President-elect Trump's appointment of pro-crypto Paul Atkins to head the US Securities and Exchange Commission (SEC). Bitcoin was last at $103,100, up about 5% on the day, with gains of more than 140% so far this year.
The euro strengthened 0.23% to $1.0533, not far from a two-year low of $1.0332 hit in late November, as traders braced for lingering instability in France.
The no-confidence vote passed by the French parliament on Wednesday night destabilizes the country and risks putting efforts to reduce its huge budget deficit at risk. But the volatility was expected, said Lee Hardman, senior currency analyst at MUFG.
“The spillover from the volatility outside the French market has been relatively limited. If you look at the spread between Italian and Spanish bonds and Germany, it has actually come down, so it has not spread broadly to European markets,” he said.
Markets are confident the European Central Bank (ECB) will cut rates next week and are expecting a further 157 basis points of easing by the end of 2025.
In Asia, the Japanese yen rose as high as 149.66 before falling slightly to 150.44, amid speculation that the Bank of Japan will raise interest rates this month. Comments from dovish policymaker Toyoaki Nakamura, who said he was not against a rate hike, supported the yen’s strength.
The US dollar index, which measures the greenback against a basket of six major currencies, fell slightly to 106.18. Meanwhile, sterling strengthened 0.17% to $1.2724, and the Australian dollar held steady at $0.6431 after falling 0.9% in the previous session on weak economic data.
Federal Reserve Chairman Jerome Powell said the US economy was stronger than expected as the central bank began cutting rates in September, but he signaled that the pace of easing could slow further.
Focus now turns to the NFP jobs report for November, which is expected to show an increase of 200,000 jobs, according to a Reuters poll, after just 12,000 jobs were created in October, the lowest since December 2020.
