Currencies wobble as risk appetite improves and French unrest rattles markets

The euro stayed near $1.1216 as the British pound rose modestly to $1.3308, and the Australian and New Zealand dollars each gained 0.1%. Against the yen, the dollar was unchanged at 158.56 yen ahead of a 20-year Japanese government bond auction. Chris Weston of Pepperstone Group said the market reflected improved risk appetite, with higher-carry currencies attracting buyers, while Europe showed less conviction.

French sovereign risk is being priced into equities, but the euro's resilience suggests traders do not view it as a systemic issue. French authorities imposed curfews in several cities after anti-government protests, and Italy plans to send 500 troops after two days of unrest, contributing to a widening spread between French and German 10-year bonds. The US 10-year Treasury yield held at 5.131%, and the dollar index rose 0.2% to 101.98.