Euro Gains on French Vote, Dollar Steady

5 Dec 2024 , 10:09 AM

Following the largely anticipated fall of the French government due to a no-confidence vote by opposition members, the euro saw a slight increase against the U.S. dollar on Wednesday, but it was still below session highs.

In contrast, the dollar saw no movement overall as the prospects for a December interest rate cut were on course despite indications that the US economy was slowing.

Supported by the finance ministry’s promise of “unlimited” liquidity support for markets and probable central bank involvement, the South Korean won, one of the major movers on Tuesday, rose versus the dollar. That occurred the day after Yoon Suk Yeol, the president of South Korea, announced martial law in a late-night television speech.

After far-right and left-wing parliamentarians united to support a no-confidence move against Prime Minister Michel Barnier and his administration with a majority of 331 votes, the euro was marginally stronger against the dollar at $1.0512.

The dismissal of Barnier might further strain the euro and exacerbate the political turmoil in the second-largest economy in the euro zone. The remarks made by Christine Lagarde, president of the European Central Bank, during a parliamentary hearing on Wednesday were also taken in by investors. Although she did not commit to a specific rate of easing, Christine Lagarde stated that the ECB will keep lowering rates.

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