Euro slips on French unrest as China GDP beat lifts the Aussie

The euro started the week on the back foot as escalating unrest in France weighed on the single currency. At the same time, a stronger-than-expected Chinese growth report lifted the Australian dollar, according to Investing.com.

On Friday the dollar posted its first weekly loss in five. Monday brought a different story: the euro gave back part of last week's gains, while commodity and Asia-linked currencies held up.

Overnight and early Europe

The euro opened lower on escalating riots in France, drone incidents over the Black Sea and US warnings over EU tech rules, then recovered most of the gap, according to investingLive's Asia-Pacific wrap. Investing.com reports that euro area bond spreads widened amid the French unrest, while US Treasury yields eased near one-month lows. The investingLive European session wrap said French unrest also weighed on European stocks, as US futures looked to rebound after the tech rout.

China's third-quarter GDP grew 4.5%, beating forecasts, and retail sales grew at the fastest pace since March, investingLive reports. The outlet said the modest beat supports the Australian and New Zealand dollars, though weak investment tempered the relief.

Oil eased after President Trump signed an order waiving some sanctions and duties on Russian energy, according to investingLive. Its morning preview linked the risk-on tone in Asia to that waiver. Separately, investingLive cited Al-Arabiya as saying a breakthrough in US-Iran negotiations is expected to be announced this week.

Sterling edged lower, while AI jitters clouded the dollar outlook, according to Investing.com.

The fixing as a reference point

The ECB reference rates for 19 October capture the shift against the 16 October fixing:

• EUR/USD fixed at 1.1225, down 0.25% from 1.1253.
• AUD/USD fixed at 0.6986, up 0.39%.
• USD/CAD fixed at 1.4074, down 0.61%, extending a fall of 1.32% over five fixings.
• GBP/USD was nearly flat at 1.3330, and USD/JPY fixed at 158.24, up 0.14%.
• USD/CNY fixed at 6.681, down 0.08%, while USD/MXN rose 0.55% to 18.484.

These are daily official fixings, not live quotes. Chart: EUR/USD on TradingView.

Central banks and data

Canada. September CPI rose 3.1% year on year against 3.2% expected, investingLive reports. CPI trim slowed to 1.8% and CPI common to 2.4%. The outlet called it a good report for the Bank of Canada that should ease pressure to hike rates, and a negative for the Canadian dollar. The BoC's Q3 business outlook survey indicator improved to -0.33 from -0.38. Only 6% of firms expect a recession, down from 17%. Consumers' five-year inflation expectations rose to 3.91% from 3.39%. Chart: USD/CAD on TradingView.

United States. The NAHB housing market index fell to 29 from 31, according to investingLive. It said 43% of builders cut prices in October, the highest share in the 2020-2026 period.

Europe. The ECB published Christine Lagarde's IMFC statement and a speech by Frank Elderson on climate and nature risks. On Friday, Switzerland's finance minister warned that steep European debt could trigger a euro crisis, Investing.com reports.

What to watch next

1. UK CPI on Wednesday. Headline inflation is expected to rise to 3.4% in September from 3.1%, according to investingLive, which said a hot print could complicate matters for the BoE and the government ahead of the autumn budget.
2. US-Iran talks. Al-Arabiya, cited by investingLive, expects a breakthrough announcement this week, ahead of the US midterm elections on November 3.
3. French unrest. Investing.com and investingLive both tie the euro's softness to the situation in France and the widening of euro area spreads.