Dollar Firms as Euro Sags on French Unrest, Yuan Hits Four-Year High on Strong GDP

The US dollar edged higher in quiet Asian trading on Monday, October 19, after four straight weekly gains came to an end last week. The euro fell 0.1% to $1.1225 as markets opened in Asia, and with the single currency carrying the biggest weight in the dollar index, its decline was enough to steady the greenback near its lowest level of the month, at 101.83. The catalyst was political: France suffered one of its worst days of cost-of-living unrest in years over the weekend, prompting President Emmanuel Macron to condemn the “shocking” scenes of violence in a televised address to the nation on Sunday.

Currency traders, though, are not watching the barricades — they are watching French bonds. “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, pointing to the spread between French OATs and German bunds sitting near 140 basis points. In plain terms: as long as France’s budget deadlock keeps that spread wide, investors demand a higher premium to hold French debt, and that drags on the euro. Williams expects appetite for the single currency to “stay thin this week” with rallies sold until there is a clearer outcome on the budget. Last week’s numbers show what is at stake: the dollar index fell 0.26% on the week — its first weekly loss in four — letting the euro climb off a 17-month low to $1.1238, while G7 government bonds posted their strongest weekly performance since late May.

The other big mover on Monday was the yuan. China’s economy grew 4.5% year-on-year in the third quarter, beating the 4.4% consensus and rebounding from the 4.3% three-year low of the second quarter. That kept cumulative 2026 growth at 4.6%, inside Beijing’s 4.5–5% annual target, and retail sales for September accelerated. The People’s Bank of China set the midpoint at 6.7208 per dollar — its strongest fixing since February 2023 — and the yuan firmed to around 6.68, its strongest in more than four years. Capital Economics noted the economy “regained momentum at the end of the third quarter,” though analysts at Huatai Futures caution the China-US rate gap will keep the yuan range-bound rather than in a one-way rally. Elsewhere in Asia the picture was less calm: the dollar held flat near 158.00 yen after Bank of Japan Governor Kazuo Ueda said underlying inflation is “quite close” to the 2% target, while the Indonesian rupiah slid to 18,000 per dollar — its weakest in almost three months and a fourth straight daily fall — after index compiler MSCI threatened to downgrade Indonesia’s stock market to standalone status, triggering an 11.6% equity collapse. Sterling was flat at $1.3329 and the Australian dollar added 0.3% to $0.6965.

Cross-asset moves backed the cautious tone. Brent crude slipped 1.7% to $108.02 a barrel after US President Donald Trump waived sanctions and tariffs on Russia, raising the prospect of more Russian fuel exports. Gold drew support from the softer dollar at $4,167.14 an ounce, and in crypto Bitcoin rose 1.4% to $82,067 while ether climbed 3% to $2,420.

What to watch next: the Federal Reserve is now in its blackout period ahead of its October 28 decision, with fed funds futures pricing an 84% chance of no change, and the European Central Bank follows on October 29 — making this a week when “positioning is likely to stay light and headline risk out of France will remain high,” as InTouch’s Williams put it. For the euro, the 1.1350 zone is the resistance to watch — failure there keeps the downtrend alive; for the yen, Ueda’s inflation comments raise the stakes for any Bank of Japan tightening talk. New to currencies? Our forex section explains how yields and bonds move exchange rates, and the forex tools page has pip and position-size calculators for sizing risk before you trade. (Not financial advice.)