Dollar firmer, euro weakens as French protests turn violent

Dollar Strengthens, Euro Drops as French Protests Pressure Global Markets

Market Reactions to French Protests and Global Economic Events

By Gregor Stuart Hunter

Currency Movements in Early Asian Trading

SINGAPORE, Oct 19 (Reuters) - The dollar edged up from near its lowest levels of the month at the start of trading in Asia on Monday as violent protests in France put pressure on the euro.

The euro fell 0.1% at $1.1225 as trading began in Asia. The biggest weighting in the dollar index, the common currency's drop helped steady the greenback, which traded level at 101.83.

Impact of French Unrest on the Euro

French President Emmanuel Macron condemned on Sunday "shocking" scenes of violence on the sidelines of protests over the cost of living in a televised address to the nation, a day after France suffered one of its worst days of unrest in years.

"The weekend unrest matters for the euro mainly through French bonds rather than directly," said Kieran Williams, head of Asia FX at InTouch Capital Markets in London. 

Performance of Major Currencies

Dollar-Yen and Dollar-Yuan Trends

Against the yen, the US dollar was flat at 158.00 yen as Bank of Japan Governor Kazuo Ueda said on Monday underlying inflation is "quite close" to the central bank's 2% target. 

The US dollar was flat at 6.6842 yuan in offshore trade ahead of the release of Chinese GDP data for the third quarter. China's economy is expected to have sped up slightly in the period from a more than three-year low. 

Emerging Market Currencies

Focus on Indonesian Rupiah

In emerging market Asia, much of the focus will be on the Indonesian rupiah following a threat from MSCI to downgrade the country's stock market to "standalone" status last week, which triggered a 11.6% collapse in equities. The rupiah hit its weakest level in almost three months on Friday, closing at 18,000 against the dollar.

Other Regional Currencies

The Australian dollar appreciated 0.3% to $0.6965, while its kiwi counterpart was flat at $0.5656. The British pound was flat at $1.3329.

Commodities and Central Bank Expectations

Oil Prices and US Policy Moves

Oil prices slipped as trading resumed in Asia on Monday, with Brent crude futures down 1.7% at $108.02, after US President Donald Trump waived sanctions and tariffs on Russia that may lead to more Russian fuel exports. 

Federal Reserve and ECB Outlook

Fed funds futures are pricing an implied 84% probability that the Federal Reserve stays on hold at its next two-day meeting on October 28, little changed from Friday, according to the CME Group's FedWatch tool.

"This is a run up week to the Fed on October 28 and the ECB on October 29, so positioning is likely to stay light and headline risk out of France will remain high," InTouch's Williams added.

Cryptocurrency Market Update

In cryptocurrencies, bitcoin was up 1.4% at $82,067.66, while ether climbed 3.0% to $2,420.22.

(Reporting by Gregor Stuart Hunter; Editing by Edwina Gibbs)