Euro drops amid French political uncertainty
Euro39;s decline drives dollar index to highest since early May

June 14 Reuters The euro was on track for its biggest weekly fall against the dollar in two months on Friday on concerns that a new government will worsen French fiscal situation as a snap parliamentary election approaches.

The yen hit a sixweek low against the dollar, before rebounding, after the Bank of Japan BOJ surprised markets with a dovish monetary policy update.

French markets endured another brutal selloff as political uncertainty unleashed the biggest weekly jump in the premium investors demand to hold French government debt since 2011, and bank stocks tumbled.

On both ends of the French political spectrum, the parties that are campaigning are fiscally expansionist parties, said Karl Schamotta, chief market strategist at Corpay in Toronto. Markets are mostly responding to additional fiscal stress.

French Finance Minister Bruno Le Maire said on Friday that the euro zone39;s secondbiggest economy was at risk of a financial crisis if either the far right or left won because of their heavy spending plans.

Marine Le Pen39;s eurosceptic National Rally RN is leading in opinion polls following President Emmanuel Macron39;s surprise decision last Sunday to call a snap election.

The euro is on track for a 1.2 weekly fall its biggest since April and was last down 0.61 on the day at 1.0668, the lowest since May 1.

The euro39;s weakness has helped drive…