Euro trades near seven-week low as Italy budget concerns loom

Published on: 11/8/18 10:04 AM

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Category: Forex, Market, Trading, World News

Euro at a seven week low


On Tuesday, the euro was right near its seven-week low due to the ongoing worry over Italy’s budget issues. A dispute involving the European Union over the budget has caused the euro to continue treading these low levels rather than recovering some.

There were traders who had been betting on the potential for a fourth-quarter rebound with the euro. Unfortunately, the situation involving Rome’s spending and the European Central Bank‘s monetary policy has many investors leaving the euro behind. The euro was down 0.2 percent at $1.1465 which is right near its $1.146 seven-week low.

The battle continues between the European Commission and the Italian government over the country’s budget. It could become an unprecedented move by the commission to reject Italy’s budget if they don’t find a way to improve the deficit figures they’ve announced. However, Italy’s Prime Minister recently declared the commission’s president and Economics Commissioner “enemies of Europe”.


Italian government bond yields were also down slightly from their 4-1/2-year highs. Speculation was that these were down because investors believed Economy Minister Giovanni Triawill might use a more moderate approach as he tried to justify the country’s budget before parliament.

Rest of the world


Meanwhile, other currencies or investments have been doing better as forex traders seek safety from the euro. For example, the Japanese Yen has shown strength against the euro, while 10-year and 30-year U.S. Treasury yields are now at new multi-year highs. The Chinese offshore yuan also saw a bit of a boost. It was at a level of 6.1960 per dollar. The yuan had fallen a bit overnight, so the recovery was a pleasing sight for some traders.

Interestingly, the Chinese government are trying to push their country’s yields down at the moment due to the ongoing trade battle with the United States. Meanwhile, the U.S. yields are on the rise. Many investors are continuing to fear the potential for the stock market to fall further as interest rates are continually being increased by the Federal Reserve.

It’s been a relatively quiet stretch of days in terms of economic data. Still, there are a few key figures on the way from the United States in the coming week which could help the euro out. On Wednesday, there will be the announcement of the Producer Price Index (PPI) with the Consumer Price Index (CPI) coming a day later.

Some analysts and journalists suggest that reports of weaker than expected US inflation figures could help the euro. However, the chances that this will actually happen with the US figures are very slim, giving credibility to the speculation of further euro weakness.