Euro Falls Amid Political Uncertainty

(RTTNews) - The euro weakened against other major currencies in the European session on Wednesday, as trader's concern about the collapse of France's government.

Following the failure of French Prime Minister Francoise Bayrou's minority administration to secure support in a September 8 confidence vote to approve a severe decrease in spending cuts, France is now the primary market focus in Europe. This has alarmed markets since it is likely to result in the dissolution of the cabinet and the return of eurosceptic rhetoric from the opposition parties.

Bayrou urged lawmakers on Tuesday to choose between "chaos" and "responsibility," when the confidence vote takes place on September 8.

The standoff between U.S. President Donald Trump and Fed Governor Lisa Cook is the main topic of discussion in the US. Cook has sued the US president, according to recent news sources, and her attorney said that Trump "lacks any factual or legal basis" to remove the governor. Investor confidence in US institutions is likely to suffer as the process drags on.

In other economic news, German consumer confidence is set to continue to fall in September as rising fear of job losses weighed on purchase decisions and damped hopes of robust economic recovery.

The forward-looking GfK consumer sentiment index fell to -23.6 in September from -21.7 in the previous month. The reading was forecast to drop moderately to -22.

In the European trading today, the euro fell to a 6-day low of 0.9344 against the Swiss franc, from an early high of 0.9360. On the downside, 0.91 is seen as the next support level for the euro.

Against the pound and the yen, the euro dropped to 1-week lows of 0.8618 and 171.26 from early highs of 0.8641 and 171.91, respectively. If the euro extends its downtrend, it is likely to find support around 0.84 against the pound and 169.00 against the yen.

Against the U.S. and the Canadian dollars, the euro slid to a 3-week low of 1.1578 and 1.6042 from early highs of 1.1642 and 1.1601, respectively. The euro may test support near 1.13 against the greenback and 1.15 against the loonie.

Looking ahead, Canada wholesale sales data for July, U.S. MBA mortgage approvals data an U.S. EIA crude oil data are slated for release in the New York session.