Euro slides, pressured by French political uncertainty

The euro has fallen as mounting political uncertainty in France kept European markets under pressure, while tech stocks lifted global shares and the dollar strengthened in a key week for the outlook for US interest rates. The US currency received an additional boost from US President-elect Donald Trump at the weekend, who warned BRICS emerging nations against trying to replace the greenback with any other currency. "There'll be two drivers of market volatility this month. The first remains the impact of Trump, especially future fiscal settings and, increasingly, looming trade wars," said Kyle Rodda, senior financial markets analyst at Capital.com. "The second is what the US Federal Reserve does with policy this month. "If the Fed delivers (a cut) and provides sufficiently dovish guidance, it may green light some sort of 'Santa Rally'." The euro was struggling and French stocks looked set to slide later on Monday due to the risk of an imminent collapse of the French government, with Prime Minister Michel Barnier confronted with a Monday deadline to make more budget concessions or face a no-confidence vote. France's far-right National Rally (RN) party would likely back a no-confidence motion against the government unless there is a "last-minute miracle", RN president Jordan Bardella said. The euro fell as much as 0.57 per cent to $US1.05155 earlier, having traded at one-week highs on Friday. French stock index futures fell 1.4 per cent, pointing to a sharp drop at the start of trade for the CAC 40 index. If the Barnier government falls, broader downward pressure on the euro would quickly reassert itself, including against the Swiss Franc, said Paul Mackel, global head of FX research at HSBC. The Federal Reserve is in sharp focus, with Friday's monthly payrolls report set to inform policymakers' thinking about whether to cut rates again on December 18. A number of Fed officials are due to speak this week, including Fed chair Jerome Powell on Wednesday. Traders put the odds of a quarter-point reduction about 66 per cent. That has left the dollar index, which measures the currency against six major rivals, 0.24 per cent higher at 106.28. In Asia, Chinese shares received an additional boost from a robust reading in a private manufacturing survey on Monday. Hong Kong's Hang Seng inched up 0.16 per cent, while mainland Chinese blue chips rose 0.6 per cent. In a holiday-shortened session on Friday, the S&P 500 and Nasdaq added 0.6 per cent and 0.8 per cent respectively to close at record highs. The yen, meanwhile, weakened 0.4 per cent to 150.31, but remained near Friday's six-week high of 149.47. In cryptocurrencies, ether hit a near six-month high of $US3,762.20 and was last up two per cent at $US3,674.44. Bitcoin was last at $US96,434, hovering close to the record high from November 22 at $US99,830. Gold sank one per cent to $US2,627.71 under pressure from the strong dollar, after sliding more than three per cent in November, its worst monthly performance since September 2023. Oil prices rose after Chinese manufacturing data, and as Israel resumed attacks on Lebanon despite a ceasefire agreement. Brent crude futures were up 0.8 per cent at $US72.41 a barrel, while US crude was up 0.87 per cent at $US68.59.