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News
Tuesday, October 06, 2026
What’s happening: The euro traded lower versus the US dollar this morning amid rising political uncertainty across Europe.
What happened: The EUR/USD forex pair extended losses after dipping to its weakest level in around 17 months in the previous session.
The US dollar remained close to its highest level since April 2025, exerted further pressure on the European common currency.
Why it matters: Investors remained concerned about mounting debt and political deadlock in France. The country’s public debt has risen to 119% of its GDP and is poised to surge toward 122%, as the government looks to borrow a record €340 billion next year.
Last week, yields on 10-year French government bonds climbed to their highest level since 2002.
Meanwhile, political tensions grew in Spain after Prime Minister Pedro Sanchez announced a snap general election following the rejection of housing relief measures by Congress.
Data released on Monday showed that the S&P Global Eurozone composite PMI improved to 53.1 in September from 52 in the previous month, hitting its strongest level in around three and a half years. Eurozone’s services PMI also surged to 53.0 in September from August’s 51.6 reading.
Eurozone’s producer prices climbed 1.9% in August, up from 1.6% in July. This marked the highest reading since March.
Meanwhile, the US dollar found support from rising Treasury yields, with long-term bond yields surging to their highest levels in over two decades. Data released on Monday showed a further surge in cost pressures in the US services sector. The Prices Index rose to 74 in September, its highest level since July 2022 and remaining above the 70 level for the sixth time in seven months.
The weaker-than-expected jobs data released on Friday dampened speculations of the Federal Reserve hiking its benchmark interest rates this month.
Strength in the US dollar weighed on the EUR/USD forex pair this morning. The US dollar index, which measures the greenback’s performance versus a basket of major peers, traded higher at 102.18 this morning, remaining near 18-month highs.
The EUR/USD pair fell 0.1% to 1.1217 this morning, after falling to as much as 1.1161 during the session, its lowest level since May 16, 2025.
The EUR/GBP forex pair also slipped to 0.8487 this morning.
What to watch: Investors will continue monitoring France’s political situation and fiscal outlook.
Data on retail sales (1300 UAE Time) from the Eurozone will be released today. Eurozone’s retail sales, which declined 0.6% in July after 0.2% growth in June, are expected to rise by 0.2% in August.
Context: Gold prices fell this morning amid strength in the US dollar and higher Treasury yields.
Details: US 10-year Treasury yields surged to two-decade highs, while the US dollar continued its uptrend this morning.
Strength in the US dollar weighed on gold prices as a higher greenback makes metals more expensive for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, edged higher to 102.18 this morning.
Expectations of the Federal Reserve hiking its benchmark interest rates eased after the US reported a weak NFP (nonfarm payrolls) report for September, while revising the headline figures for the previous two months lower.
While investors lowered speculations of the Fed raising interest rates this month, markets still broadly expect the US central bank to hike rates in December. Higher interest rates generally weigh on demand for the non-yield-bearing bullion.
Spot price for gold fell around 0.5% to $4,121.68 an ounce this morning.
In other metals trading, spot price for silver declined 0.7% to $60.6555 an ounce, platinum fell 0.7% to $1,713.11 and palladium dipped 0.9% to $1,169.11.
What to watch: Data on balance of trade (1630 UAE Time) from the US will be released today. The US trade deficit, which widened to $88.6 billion in July, the biggest gap since March 2025, is expected to rise further to $102 billion in August.
Investors also await the release of minutes from the latest Federal Open Market Committee meeting on Wednesday, which are expected to provide further insights into the the central bank’s monetary policy outlook after it increased interest rates last month.
Other Markets: US trading indices closed higher on Monday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.18%, 0.66% and 0.87%, respectively.
Germany’s chancellor Friedrich Merz announced €1 billion in military aid to Ukraine. The news sent the USD/RUB forex pair higher in forex trading this morning.
Australia’s ANZ–Indeed job ads surged 2.2% in September, easing from the previous month’s 2.6% rise, which exerted pressure on the AUD/USD forex pair.
Hong Kong’s S&P Global SAR PMI fell to 49.2 in September from 49.1 in the previous month. The private sector contracting for the second straight month sent the USD/HKD pair higher in forex trading this morning.
Canada’s S&P Global services business activity index climbed to 48.3 in September from 46.8 in the previous month. Services activity remaining in the contraction zone lent support to the USD/CAD forex pair.
UK’s S&P Global composite PMI came in at 52.0 in September, higher than the preliminary reading of 51.7. However, the latest figure falling coming in below August’s 52.5 level sent the GBP/USD pair lower in forex trading this morning.
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