Euro dips further as French central bank chief warns the country risks being ‘strangled by interest rates’ – business live

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Euro extends last week’s 1.2% drop amid French debt fears and political uncertainty in Europe Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. The euro remains under pressure amid French debt fears and political uncertainty across Europe, trading near a 17-month low against the dollar, down 0.13% to $1.1206. France is not Greece during the eurozone crisis. If it can pass a budget this year to reduce spending and narrow the deficit as the government has proposed, then markets will be reassured by this concrete step of fiscal consolidation. If we don’t act, there is indeed a risk of being gradually strangled by rising interest rates. We have to remain masters of our own destiny. French [bond] spreads have tightened in the last two sessions, falling from an intra day high of over 150 basis points to 136bp currently. We don’t think that we are in a sovereign crisis. Our fear is that as spreads move above 150bp, we could see some contagion risks not just to other French names, but also onto European peripherals. We have highlighted a number of times that deficit concerns should be a greater risk for investors than near term inflation. Market is going after the weakest link in the deficit picture which is France and the UK. 8.30am BST: Eurozone S&P Global Construction survey for September 9.30am BST: UK S&P Global Construction PMI for September 10am BST: Eurozone retail sales for August UK chancellor meets with bank bosses 11am BST: Financial Conduct Authority annual meeting in Edinburgh 1.15pm BST: US ADP employment change weekly data 1.30pm BST: US trade for August Continue reading...

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