Dollar near one-month high as Italy woes take toll on euro

Dollar near one-month high as Italy woes take toll on euro

TOKYO,. The dollar stood near a one-month high against its peers today as concerns as political wrangling over Italy’s budget plan rattled market sentiment and weighed on the euro.

The greenback rose as the euro slumped after a senior Italian lawmaker said most of the country’s problems would be solved if it returned to a national currency of its own.

The euro was little changed at US$1.1550 (RM4.7810) in Asian trade after retreating to a six-week low of US$1.1505 overnight.

The Italian lawmaker, Claudio Borghi, later back-pedalled on his comments. Italian Prime Minister Giuseppe Conte also said the euro was “unrenouncable.”

Still, that was not enough to prompt a strong bounce for the euro, which has been stung recently by worries over heavily indebted Italy’s budget situation.

The dollar index against a basket of six major currencies was steady at 95.468 after scaling 95.744 overnight, its highest since Sept. 4 as Italian concerns chilled investor risk sentiment in the broader markets and raised demand for the safe-haven U.S. currency.

The yen, another safe-haven currency, also gained against peers such as the euro, dollar and Australian dollar.

The greenback last stood at ¥113.62, having pulled back from an 11-month high of 114.06 reached on Monday.

“The slip by European currencies in the wake of the latest Italian concerns has lifted the dollar. But a larger component of the dollar’s recent rise comes from fundamental factors fortified after the Fed’s rate hike,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

The dollar index has advanced about 1.4 per cent since last Wednesday, when the Federal Reserve raised interest rates as expected and said it foresees another rate hike in December, three more next year and one in 2020.

“US data due later today such as the non-manufacturing ISM index and Friday’s jobs report will provide a chance to see if the economy is performing in line with the Fed’s views,” Ishikawa said.

The pound was little changed at US$1.2981 after dropping yesterday to US$1.2941, its weakest since September 10, as conflicts over Prime Minister Theresa May’s Brexit plan escalated.

The Australian dollar was steady at US$0.7189 after sliding the previous day to a two-week trough of US$0.7162. The Aussie, sensitive to shifts in global risk sentiment, was hit as equities sold off on worries over Italy.

In the near term, Australian dollar risks probably remain to the downside, given the confluence of the recent Fed meeting, the US review of China tariffs and Italy budget risks, currency strategists at Westpac wrote. ? Reuters