Dollar steady, euro weakens after French protests turn violent

By Gregor Stuart Hunter

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

The euro fell 0.1% to $1.1230. The common currency has the biggest weighting in the dollar index and its drop helped steady the greenback, which recently traded level at 101.82.

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. "With the OAT-bund spread already close to 140 basis points, appetite for the euro is likely to stay thin this week and I’d expect rallies to be sold until there is a clearer outcome on the budget."

Against the yen , the US dollar was flat at 158.09 yen as Bank of Japan Governor Kazuo Ueda said on Monday underlying inflation is "quite close" to the central bank's 2% target.

Against the Chinese yuan , the US dollar was down 0.1% at 6.6811 in offshore trading, the greenback's weakest level since June 2022, after data released Monday showed Chinese gross domestic product for the third quarter grew slightly more than expected.

In Southeast Asia, the Indonesian rupiah extended declines into a fourth day following a threat from index compiler MSCI to downgrade the country's stock market from its flagship emerging markets index to "standalone" status last week, which triggered an 11.6% collapse in equities. The rupiah slipped 0.2% to around its weakest level in almost three months on Monday.

"Indonesia remains one of our key concerns," MUFG analysts wrote in a note. "MSCI concerns add another layer of pressure on the rupiah," alongside "a combination of higher US yields, weaker external balances from elevated oil prices and a tougher trade-off for Bank Indonesia."

The Australian dollar appreciated 0.5% to $0.6975, while its kiwi counterpart was flat at $0.5655. The British pound was steady at $1.3329.

Oil prices fell in Asian trading on Monday, with Brent crude futures down 1.7% at $108.01, after US President Donald Trump waived sanctions and tariffs on Russia that may lead to more Russian fuel exports.

Fed funds futures are pricing an implied 87% probability that the Federal Reserve stays on hold at its next two-day meeting beginning 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.

In cryptocurrencies, bitcoin was up 1.9% at $82,479.24, while ether climbed 3.0% to $2,420.22.