FX markets

Daily Market View 09/10/2025

French government saved by last minute brinksmanship

1 Minute Market Rundown

Ex-French PM Lecornu says that there is sufficient consensus in the general assembly to avoid the need for an election
Euro rallies off back of the news as Macron searches for new PM, the 5th PM within the space of a year
Dollar mostly unmoved by mid-east ceasefire deal, as Government shutdown continues

EUR-

The French government has lived up to countries dramatic nature by seemingly saving itself just in the nick of time. After initial reports yesterday that suggested a deal to save the government would be both expensive (in terms of political capital) and unlikely to succeed given the animosity within the assembly, it seems a deal is to be struck.

Outgoing PM Lecornu presented his suggestions to President Macron last night, with Lecornu confident that a national election can be avoided and order restored with some nimble political footwork.

It's not quite mission complete, but Macron seems intent to plough ahead and appoint a new PM on Friday, who will then have to start the work of appointing a cabinet all over again. The situation is just a plaster, working for now but not really representing a full fix and just what kind of deal will be struck between the government and the other parties will be a major detail when considering the Euro's short term outlook.