Euro falls against dollar as risks rise in European markets

The euro fell against the dollar on Monday, falling 0.65% to $1.0506, amid concerns in European financial markets about rising risk premiums on government bonds.

The spread between French and German 10-year government bond yields rose by five basis points to 85 basis points, reflecting increased demand for German bonds as a safe haven. This level is close to the highest point recorded last week since the eurozone sovereign debt crisis in 2012.

In contrast, the dollar index continued to make gains, rising 0.6% to 106.39 points, reflecting a strong performance by the US currency against other major currencies. The Chinese yuan also fell to a four-and-a-half-month low of 7.2856 per dollar, while the dollar rose 0.3% against the Japanese yen to 150.18 yen. On another note, economic data showed that business investment in Japan is growing at a healthy rate of 8.1% during the third quarter of the year, reinforcing market expectations that the Bank of Japan may raise interest rates by a quarter of a percentage point at its next meeting in December.