Euro Ticks up despite French Govt Collapse

The euro managed to rise despite the uncertainty because the collapse of the government was already priced in (File Photo/Reuters)
The euro managed to rise despite the uncertainty because the collapse of the government was already priced in (File Photo/Reuters)
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Euro Ticks up despite French Govt Collapse

The euro managed to rise despite the uncertainty because the collapse of the government was already priced in (File Photo/Reuters)
The euro managed to rise despite the uncertainty because the collapse of the government was already priced in (File Photo/Reuters)

The euro picked up on Thursday despite the collapse of the French government, which had been widely expected, and the yen rallied as traders looked to the Bank of Japan decision on Dec. 19.

The euro was up 0.16% at $1.0525, not far from the two-year low of $1.0332 hit at the end of November as traders braced for a drawn-out reckoning for France.

French lawmakers passed a no-confidence vote against the government on Wednesday evening, throwing the country deeper into a crisis that threatens its capacity to tame a massive budget deficit. The risk premium - or spread - investors demand to hold French debt over German has risen to around its highest since 2012, according to Reuters.

The euro managed to rise despite the uncertainty because the collapse of the government was already priced in, said Lee Hardman, senior currency analyst at MUFG.

"The contagion outside of French markets is fairly limited. If you look at the spreads between (German and) Italian and Spanish bonds they've actually been falling, so it's not spilling over into European markets and that limits the implications for the European economy," he said.

Traders are all but certain the European Central Bank will cut rates next week and are pricing in around 157 basis points of easing by the end of 2025.

YEN GAINS GROUND

In Asia, the Japanese yen strengthened over 0.3% to 150.80 per dollar as traders assessed whether the Bank of Japan will hike interest rates later this month.

Analysts said comments from typically dovish policymaker Toyoaki Nakamura that he's not opposed to rate hikes had helped push the currency higher.

Expectations had been growing that the BOJ will hike rates at its Dec. 18-19 meeting, buoyed by comments from Governor Kazuo Ueda. But media reports published on Wednesday suggested the BOJ may skip a rate hike this month, muddling those wagers.

The South Korean won dipped slightly as the nation's finance ministry said the government would activate 40 trillion won ($28.35 billion) worth of market stabilization funds after the chaos that followed President Yoon Suk Yeol declaring martial law on Tuesday and then rescinding.

The dollar index, which measures the US currency against six rivals, was slightly lower at 106.18.

Sterling ticked up 0.15% to $1.2721, while the Australian dollar was flat at $0.6431 after dropping about 0.9% in the previous session on weak data.

Federal Reserve Chair Jerome Powell said on Wednesday the US economy is stronger now than the central bank had expected when it started cutting rates in September, and he appeared to signal his support for a slower pace of reductions ahead.

Bets on Fed rate cuts held broadly steady, however, perhaps influenced by weaker-than-expected services sector data released on Wednesday. Markets are pricing in about a 74% chance of a 25-basis-point rate cut later this month.

The spotlight will be on Friday's US non-farm payrolls report for November, which is expected to show 200,000 jobs added in the month, according to a Reuters survey, after only 12,000 jobs were created in October, the lowest number since December 2020.

 

 

 



Saudi PIF, Elm Sign Agreement for Elm to Acquire Thiqah

The Public Investment Fund (PIF) logo
The Public Investment Fund (PIF) logo
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Saudi PIF, Elm Sign Agreement for Elm to Acquire Thiqah

The Public Investment Fund (PIF) logo
The Public Investment Fund (PIF) logo

The Public Investment Fund (PIF) and Elm, a leading digital solutions company, have signed a share sale and purchase agreement for Elm to acquire Thiqah Business Services Company – a firm specializing in smart technology solutions for business services – in a deal valued at $907 million (SAR3.4 billion).

Completion is expected once regulatory approvals are obtained and certain conditions are satisfied under the agreement.

According to a PIF statement, the transaction will further support a thriving local information and communication technologies (ICT) ecosystem and contribute to PIF’s strategy which aligns with the Vision 2030 aim of using digital transformation to create the high-skills jobs of the future and further grow the Saudi economy. The deal will enhance the growth of the ICT sector, drive innovation, and localize technologies and knowledge by strengthening Elm to lead the sector at the national level, maximizing the value chain by providing a wide range of ICT products, services and devices.

The ICT sector is among PIF’s strategic priority investment sectors, being a key enabler of other key sectors, including entertainment, financial services, healthcare, transport and logistics, and utilities and renewables, the statement said.

“PIF is committed to enabling the creation of national champions which contribute to driving the development and growth of the Saudi economy. PIF’s sale of Thiqah to Elm will contribute to enhancing the vital role of the ICT sector and will strengthen efforts to localize technology and drive innovation,” Head of Technology and Media, MENA Investments, at PIF Shahd Attar said.

CEO of Elm Mohammad Abdulaziz Alomair said: “This is an important transaction for Elm, as it enhances integration, rationalizes spending, increases profitability, and provides qualitative advantages for both parties and the market.”

“The combined integrated entity will be better able to create advanced national smart services to serve market requirements and clients’ needs. It will also contribute to facilitating innovative operations and capabilities to develop products in the business field with cost advantages while achieving economies of scale,” he added.