Published by Uma Rajagopal
Posted on December 4, 2024
4 min readLast updated: January 28, 2026
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By Kevin Buckland and Alun John
TOKYO/LONDON (Reuters) – The euro marked time on Wednesday ahead of France’s no- confidence vote, while the Australian dollar tumbled to a four-month low on slowing economic growth and the won rebounded after South Korea’s president backed down after declaring martial law.
The European common currency was holding steady at $1.0512 and 82.90 pence ahead of a vote by French lawmakers on no-confidence motions which are all but certain to oust the fragile coalition of Prime Minister Michel Barnier.
The debate is due to start at 4 p.m. in Paris (1500 GMT), with voting expected about three hours later, parliament officials said.
Barnier’s removal would deepen the political crisis in the euro zone’s second-largest economy, and could further weigh on the euro, which has fallen sharply since Donald Trump’s victory in the U.S. presidential election.
“The unfavourable political developments in France continue to pose a downside risk for the euro although are not necessarily sufficient to trigger another leg lower on their own,” said analysts at MUFG.
Euro-watchers are also keeping an eye out for remarks by ECB President Christine Lagarde later in the day.
Earlier on Wednesday, the Australian dollar sank as much as 1.22% to the lowest since Aug. 4 at $0.6408 after data showed the economy grew at the slowest annual pace since the pandemic in the third quarter.
Markets moved to fully price in a rate cut next April from 73% before and the currency was last at $0.6429
“The weakness of annual growth in spending and continued pressures on household disposable income – even with tax cuts flowing – points to a weaker underlying picture,” said Pat Bustamente, senior economist at Westpac.
Eyes were also on South Korea’s won, which regained some ground on Wednesday after plunging overnight in the wake of President Yoon Suk Yeol’s declaration of martial law, which was reversed hours later.
The dollar was last down 0.7% at 1414 won, after jumping 1.6% overnight. But politics remained in focus and South Korean lawmakers on Wednesday called on Yoon to resign or face impeachment.
Dealers said the country’s central bank may have supported the won at Wednesday’s open by selling dollars.
“Near term, you’ve got to think that it’s going to be difficult for the won to do particularly well: (There is a) terrible structural backdrop, the domestic economy looks weak, you’ve got the central bank likely coming in and doing more (easing) than was previously expected, and on top of that, political malaise,” said Rob Carnell, ING’s regional head of research for Asia-Pacific.
The fact that just generally the dollar looks stronger than everything else by default (makes it) almost a perfect storm.
The dollar also climbed on the Japanese yen gaining 0.5% to 150.43, after media reports which raised doubts about market expectations that the Bank of Japan would hike interest rates this month sent government bond yields lower. [JP/]
As for dollar-specific developments, the currency got some support on Tuesday after data showed U.S. job openings increased moderately in October while layoffs declined, even as Federal Reserve officials on the day did not provide definitive guidance on what they intend to do at the conclusion of their next policy meeting in two weeks’ time.
Traders are waiting for monthly payrolls data on Friday for more clues on the rates outlook, while a private payrolls report due later on Wednesday will offer something of a preview.
Market-implied odds of a quarter-point rate reduction on Dec. 18 last stood at 75%, according to CME’s FedWatch Tool.
Sterling was flat at $1.2674, ahead of remarks from Bank of England governor Andrew Bailey.
(Reporting by Kevin Buckland; Editing by Muralikumar Anantharaman and Kim Coghill)
The euro is the official currency of the Eurozone, which includes 19 of the 27 European Union member states. It is used by over 340 million Europeans and is one of the world's most traded currencies.
Economic growth refers to the increase in the production of goods and services in an economy over a period of time, typically measured by the rise in Gross Domestic Product (GDP).
A central bank is a financial institution that manages a country's currency, money supply, and interest rates. It also oversees the banking system and implements monetary policy.
Currency exchange is the process of converting one currency into another, typically for trade, tourism, or investment purposes. Exchange rates fluctuate based on market conditions.
The Australian dollar (AUD) is the official currency of Australia, as well as several of its territories and Pacific Island nations. It is one of the most traded currencies in the world.
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