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Euro drops below $1.16 with Italy’s budget concerns, USD stays strong on trading platforms

Published on: 10/10/18 10:40 AM

Tags: , , ,

Category: Forex, Latest News, Trading, World News

Euro Falls


On Friday, trading platforms saw the euro fall below $1.16 as concerns over the budget battle in Italy continue to make headlines. Those headlines have also caused the euro to struggle against the US Dollar. It was the first time in two weeks that the British currency has fallen below that mark and also the biggest one-day decline in about two months.

According to CNBC’s report, the markets may be “nervous” over the spending plans that the Italian government has. Some believe these plans could boost the country’s debt. The Italian government has been looking at a budget deficit of 2.4 percent of the GP. That would be inside the ceiling of three percent that EU rules dictate.

For days, investors were under the belief the Italian coalition government would agree to a deficit target of less than two percent of the GDP for 2019. However, they shook things up with the news of a projected 2019 deficit at 2.4 percent of the GDP. That 2.4 percent deficit may lead to the public debt amount rising again in 2019 rather than dropping, which certainly hurts overall expectations. It’s also believed that Italy’s proposed deficit could lead to a future strain on Rome and Brussels’ current relationship.

While the euro has struggled, the US Dollar has seen a broad rally. The dollar index moved up to 95.239, the highest mark since Sept. 12 with an overall gain of one percent this past week. Investors may have continued to put faith in the greenback after encouraging comments out of this past week’s Federal Reserve policy meeting which echoed positive sentiments about the US economy. The USD was at a nine-month high against the Japanese yen and also advanced versus the pound and Swiss franc.

Brittish pound and Australian Dollar

In other currency, the British pound dropped to an 11-day low of $1.3035 on Friday after new data arrived. It provided news that in 2018’s second quarter, British companies had reduced their investment. The Swiss franc also remained near its one-month low of 0.9782 per USD, while the Australian dollar (AUD) was up 0.1 percent to $0.7212 after a 0.7 drop this past Thursday.

The good news for the euro is that many people who still believe in the currency’s strength. Many investors are waiting for the European Central Bank’s interest rates to normalize. Analysts also see the Italian budget debate as a “headwind for the euro” and not something that will continue to drag it down.